rp-20260630

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37496

RAPID7, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware						35-2423994
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


120 Causeway Street
Boston,	MA	02114
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (617) 247-1717


Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	RPD	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 3, 2026, there were 67,400,640 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

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		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive (Loss) Income	3
	Condensed Consolidated Statements of Changes in Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43
PART II.	OTHER INFORMATION	44
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	45
Item 6.	Exhibits	46
	Signatures	47

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

RAPID7, INC.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)




	June 30, 2026		December 31, 2025
Assets
Current assets:
Cash and cash equivalents	$	425,607	$	246,664
Short-term investments	276,972		228,006
Accounts receivable, net of allowance for credit losses of $2,280 and $2,476 at June 30, 2026 and December 31, 2025, respectively	141,253		167,017
Deferred contract acquisition and fulfillment costs, current portion	46,302		48,370
Prepaid expenses and other current assets	41,045		47,230
Total current assets	931,179		737,287
Long-term investments	—		184,119
Property and equipment, net	29,179		31,990
Operating lease right-of-use assets	41,500		45,485
Deferred contract acquisition and fulfillment costs, non-current portion	66,048		66,978
Goodwill	593,334		575,268
Intangible assets, net	63,340		65,105
Other assets	18,983		20,232
Total assets	$	1,743,563	$	1,726,464
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	14,058	$	11,041
Accrued expenses and other current liabilities	93,431		96,998
Convertible senior notes, current portion, net	598,206		—
Operating lease liabilities, current portion	17,946		16,176
Deferred revenue, current portion	436,710		451,155

Total current liabilities	1,160,351		575,370
Convertible senior notes non-current portion, net	296,020		892,284
Operating lease liabilities, non-current portion	49,475		59,908
Deferred revenue, non-current portion	25,715		29,971
Other long-term liabilities	15,298		14,201
Total liabilities	$	1,546,859	$	1,571,734
Stockholders’ equity:
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized at June 30, 2026 and December 31, 2025; 0 shares issued and outstanding at June 30, 2026 and December 31, 2025	$	—	$	—
Common stock, $0.01 par value per share; 100,000,000 shares authorized at June 30, 2026 and December 31, 2025; 67,886,311 and 66,417,175 shares issued at June 30, 2026 and December 31, 2025, respectively; 67,316,056 and 65,846,920 shares outstanding at June 30, 2026 and December 31, 2025, respectively	672		658
Treasury stock, at cost, 570,255 shares at June 30, 2026 and December 31, 2025	(4,765)		(4,765)
Additional paid-in-capital	1,158,619		1,120,963
Accumulated other comprehensive (loss) income	(372)		2,527
Accumulated deficit	(957,450)		(964,653)
Total stockholders’ equity	196,704		154,730
Total liabilities and stockholders’ equity	$	1,743,563	$	1,726,464

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RAPID7, INC.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenue:
Product subscriptions	$	205,051	$	208,097	$	409,100	$	412,032
Professional services	5,832		6,096		11,474		12,414
Total revenue	210,883		214,193		420,574		424,446
Cost of revenue:
Product subscriptions	59,925		57,236		119,079		111,604
Professional services	5,620		5,823		11,215		10,935
Total cost of revenue	65,545		63,059		130,294		122,539
Total gross profit	145,338		151,134		290,280		301,907
Operating expenses:
Research and development	47,073		47,227		95,427		95,115
Sales and marketing	76,186		79,247		155,120		158,647
General and administrative	17,385		21,166		35,597		44,752

Restructuring	1,675		—		1,675		—
Total operating expenses	142,319		147,640		287,819		298,514
Income from operations	3,019		3,494		2,461		3,393
Other income (expense), net:
Interest income	5,539		5,514		11,151		11,272
Interest expense	(2,533)		(2,627)		(5,031)		(5,281)
Other (expense) income, net	(162)		3,957		(888)		5,759
Income before income taxes	5,863		10,338		7,693		15,143
(Benefit) provision for income taxes	(210)		2,000		490		4,700
Net income	$	6,073	$	8,338	$	7,203	$	10,443
Net income per share, basic	$	0.09	$	0.13	$	0.11	$	0.16
Net income per share, diluted	$	0.09	$	0.13	$	0.11	$	0.16
Weighted average common shares outstanding, basic	67,024,154		64,441,000		66,601,615		64,140,087
Weighted average common shares outstanding, diluted	67,919,961		64,696,992		67,415,140		64,462,318

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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RAPID7, INC.

Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

(in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Net income	$	6,073	$	8,338	$	7,203	$	10,443
Other comprehensive (loss) income:
Change in fair value of cash flow hedges	(718)		2,800		(3,335)		4,615
Adjustment for net gains realized on cash flow hedges and included in net income, net of taxes	620		471		1,547		146
Total change in unrealized (losses) gains on cash flow hedges	(98)		3,271		(1,788)		4,761
Change in unrealized losses on investments	(363)		(176)		(1,111)		(42)


Total other comprehensive (loss) income	(461)		3,095		(2,899)		4,719
Comprehensive income	$	5,612	$	11,433	$	4,304	$	15,162

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

RAPID7, INC.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

Three Months Ended June 30, 2026 and 2025

(in thousands)


	Common stock			Treasury stock			Additional paid-in-capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ equity
	Shares	Amount		Shares	Amount
Balance, March 31, 2026	66,772	$	667	571	$	(4,765)	$	1,142,304	$	89	$	(963,523)	$	174,772
Stock-based compensation expense	—	—		—	—		15,611		—		—		15,611

Vesting of restricted stock units	438	4		—	—		(4)		—		—		—
Shares withheld for employee taxes	(7)	—		—	—		(46)		—		—		(46)
Issuance of common stock from acquisition	114	1		—	—		754		—		—		755
Other comprehensive loss	—	—		—	—		—		(461)		—		(461)
Net income	—	—		—	—		—		—		6,073		6,073
Balance, June 30, 2026	67,317	$	672	571	$	(4,765)	$	1,158,619	$	(372)	$	(957,450)	$	196,704


	Common stock			Treasury stock			Additional paid-in-capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ deficit
	Shares	Amount		Shares	Amount
Balance, March 31, 2025	64,182	$	642	571	$	(4,765)	$	1,042,355	$	419	$	(985,929)	$	52,722
Stock-based compensation expense	—	—		—	—		26,134		—		—		26,134

Vesting of restricted stock units	518	5		—	—		(5)		—		—		—
Shares withheld for employee taxes	(25)	(1)		—	—		(596)		—		—		(597)


Issuance of common stock from acquisition	32	—		—	—		755		—		—		755
Other comprehensive gain	—	—		—	—		—		3,095		—		3,095
Net income	—	—		—	—		—		—		8,338		8,338
Balance, June 30, 2025	64,707	$	646	571	$	(4,765)	$	1,068,643	$	3,514	$	(977,591)	$	90,447

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

RAPID7, INC.

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

Six Months Ended June 30, 2026 and 2025

(in thousands)


	Common stock			Treasury stock			Additional paid-in-capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2025	65,847	$	658	571	$	(4,765)	$	1,120,963	$	2,527	$	(964,653)	$	154,730
Stock-based compensation expense	—	—		—	—		34,328		—		—		34,328
Issuance of common stock under employee stock purchase plan	498	5		—	—		2,884		—		—		2,889
Vesting of restricted stock units	900	9		—	—		(9)		—		—		—
Shares withheld for employee taxes	(42)	(1)		—	—		(301)		—		—		(302)


Issuance of common stock from acquisition	114	1		—	—		754		—		—		755
Other comprehensive loss	—	—		—	—		—		(2,899)		—		(2,899)
Net income	—	—		—	—		—		—		7,203		7,203
Balance, June 30, 2026	67,317	$	672	571	$	(4,765)	$	1,158,619	$	(372)	$	(957,450)	$	196,704


	Common stock			Treasury stock			Additional paid-in-capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ deficit
	Shares	Amount		Shares	Amount
Balance, December 31, 2024	63,497	$	635	571	$	(4,765)	$	1,011,080	$	(1,205)	$	(988,034)	$	17,711
Stock-based compensation expense	—	—		—	—		51,907		—		—		51,907
Issuance of common stock under employee stock purchase plan	187	2		—	—		4,444		—		—		4,446
Vesting of restricted stock units	874	9		—	—		(9)		—		—		—
Shares withheld for employee taxes	(62)	(1)		—	—		(1,899)		—		—		(1,900)
Vesting of equity awards previously classified as liabilities	22	—		—	—		777		—		—		777
Issuance of common stock upon exercise of stock options	157	1		—	—		1,588		—		—		1,589
Issuance of common stock from acquisition	32	—		—	—		755		—		—		755
Other comprehensive gain	—	—		—	—		—		4,719		—		4,719
Net income	—	—		—	—		—		—		10,443		10,443
Balance, June 30, 2025	64,707	$	646	571	$	(4,765)	$	1,068,643	$	3,514	$	(977,591)	$	90,447

RAPID7, INC.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Six Months Ended June 30,
		2026		2025
Cash flows from operating activities:
Net income		$	7,203	$	10,443
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		22,441		23,055
Amortization of debt issuance costs		2,122		2,018
Stock-based compensation expense		39,715		54,732


Deferred income taxes		(2,990)		—

Other		1,135		(4,694)
Changes in assets and liabilities:
Accounts receivable		25,155		17,492
Deferred contract acquisition and fulfillment costs		2,998		9,800
Prepaid expenses and other assets		12,322		(5,798)
Accounts payable		4,033		(2,959)
Accrued expenses		(8,270)		(13,236)
Deferred revenue		(19,597)		(12,325)
Other liabilities		(9,462)		(1,229)
Net cash provided by operating activities		$	76,805	$	77,299
Cash flows from investing activities:
Business acquisitions, net of cash acquired		(23,345)		—
Purchases of property and equipment		(3,235)		(2,309)
Capitalization of internal-use software		(8,228)		(8,033)
Purchases of investments		—		(232,016)
Sales and maturities of investments		135,000		120,500

Other investing activities		(100)		1,328
Net cash provided by (used in) investing activities		$	100,092	$	(120,530)
Cash flows from financing activities:


Payment of debt issuance costs		—		(1,290)
Payments for maturity of convertible senior notes		—		(45,992)


Taxes paid related to net share settlement of equity awards		(302)		(1,898)
Proceeds from employee stock purchase plan		2,889		4,446
Proceeds from stock option exercises		—		1,589
Issuance of common stock from acquisition		—		755
Net cash provided by (used in) financing activities		2,587		(42,390)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(541)		4,847
Net increase (decrease) in cash, cash equivalents and restricted cash		$	178,943	$	(80,774)
Cash, cash equivalents and restricted cash, beginning of period		246,664		342,101
Cash, cash equivalents and restricted cash, end of period		$	425,607	$	261,327
Supplemental cash flow information:
Cash paid for interest on convertible senior notes		2,625		2,970
Cash paid for income taxes, net of refunds received		4,619		5,712

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

RAPID7, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1. Description of Business, Basis of Presentation and Consolidation and Significant Accounting Policies

Description of Business

Rapid7, Inc. and subsidiaries (“we,” “us” or “our”) specialize in AI-powered managed cybersecurity operations, trusted to advance organizations’ cyber resilience. Open and extensible, the Rapid7 Command Platform integrates security data, enriching it with AI, threat intelligence, and 25 years of expertise and innovation to reduce risk and disrupt attackers. With deep expertise in preemptive managed detection and response (MDR), Rapid7 unifies exposure and detection to transform the cybersecurity operations of more than 11,500 customers worldwide.

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared by us in accordance with accounting principles generally accepted in the United States of America (“GAAP”), as well as pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 19, 2026.

The unaudited condensed consolidated financial statements include our results of operations and those of our wholly-owned subsidiaries and reflect all adjustments (consisting solely of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. All intercompany transactions and balances have been eliminated in consolidation. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

The management estimates include, but are not limited to the determination of standalone selling prices in revenue transactions with multiple performance obligations, the estimated period of benefit for deferred contract acquisition costs, the useful lives and recoverability of long-lived assets, the valuation for credit losses, the valuation of stock-based compensation, the fair value of assets acquired and liabilities assumed in business combinations, the valuation of contingent consideration, the incremental borrowing rate for operating leases and the valuation for deferred tax assets. We base our estimates on historical experience and on various other assumptions that we believe are reasonable. Actual results could differ from those estimates.

Significant Accounting Policies

Stock-Based Compensation

Stock-based compensation expense related to PSU awards with a market condition are measured at fair value using a Monte Carlo simulation model and the expense related to these awards is recognized on a straight-line basis, over the requisite service period of the awards, which is generally the vesting term.

Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no other changes to the significant accounting policies during the six months ended June 30, 2026.

Recent Accounting Pronouncements

Accounting Pronouncements Recently Adopted

Effective January 1, 2026, the Company adopted ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05"). This guidance is designed to reduce the cost and complexity of the pre-existing application of the current expected credit loss (Topic 326). It does this by introducing a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of current accounts receivable; and a separate accounting policy election to consider collection activity after the balance sheet date when estimating expected credit losses. We adopted the standard prospectively and elected the practical expedient but did not adopt the accounting policy election. The adoption of ASU 2025-05 did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

Accounting Pronouncements Not Yet Effective

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”). Entities are required to disaggregate any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other depletion expenses. Such disclosures must be made on an annual and interim basis in a tabular format in the footnotes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2027. Early adoption is permitted. We do not plan to early adopt this standard and are currently evaluating the effect of adopting this standard.

In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”), which clarifies that all public business entities initially adopt ASU 2024-03 in the first annual period beginning after December 15, 2026, with interim adoption in annual periods beginning after December 15, 2027. We are currently evaluating the effect of adopting this standard on our disclosures.

In November 2024, the FASB issued ASU 2024-04, Induced Conversions of Convertible Debt Instruments (“ASU 2024-04”). This new guidance is intended to improve the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20 for (a) convertible debt instruments with cash conversion features and (b) debt instruments that are not currently convertible. ASU 2024-04 is effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. We do not plan to early adopt this standard. We are currently evaluating the effect of adopting this standard on our disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The ASU modernizes the internal-use software guidance, including removing development “stages,” introducing a “probable-to-complete” recognition threshold and considerations of significant development uncertainty, superseding and relocating website development cost guidance, and enhancing disclosures (including applying certain ASC 360 disclosure requirements to capitalized software costs). ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods; early adoption is permitted with prospective, modified prospective, or retrospective transition alternatives. We do not plan to early adopt and are assessing the potential impact on capitalization timing, impairment assessments, useful lives, and expanded disclosures related to our internal-use software projects, including any cumulative-effect adjustments under the selected transition method.

Note 2. Revenue from Contracts with Customers

We generate revenue primarily from: (1) product subscriptions from the sale of cloud-based subscriptions, managed services, term software licenses, content subscriptions and maintenance and support associated with our software licenses and (2) professional services from the sale of our deployment and training services related to our solutions, incident response services, penetration testing and security advisory services.

Product Subscriptions

Product subscriptions consist of revenue from our cloud-based subscriptions, term software licenses, managed services offerings, content subscriptions and maintenance and support associated with our software licenses.

•We generate cloud-based subscription revenue primarily from sales of subscriptions to access our cloud platform, together with related support services to our customers. These arrangements do not provide the customer with the right to take possession of our software operating on our cloud platform at any time. Instead, customers are granted continuous access to our cloud platform over the contractual period. Revenue is recognized over time on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our cloud-based subscription contracts generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable.

•Managed services offerings consist of fees generated when we operate our software and provide our capabilities on behalf of our customers. Revenue is recognized on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our managed services offerings generally have annual or multi-year contractual terms which are billed in advance of the annual subscription period and are non-cancellable.

•For our term software licenses where the utility to the customer is dependent on the continued delivery of content subscriptions, we recognize the license revenue over the contractual term of the content subscription.

•Content subscriptions and our maintenance and support services are sold with our term software licenses. Revenue related to our content subscriptions associated with our software licenses is recognized ratably over the contractual period.

Professional Services

All of our professional services are considered distinct performance obligations when sold stand alone or with other products. These contracts generally have terms of one year or less. For the majority of these arrangements, revenue is recognized over time based upon the proportion of work performed to date.

Contract Balances

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue over the contractual period consistent with the above methodology. For the three months ended June 30, 2026 and 2025, we recognized revenue of $185.1 million and $187.3 million, respectively, that was included in the corresponding contract liability balance as of April 1 of each respective year. For the six months ended June 30, 2026 and 2025, we recognized $316.7 million and $321.8 million respectively, that was included in the contract liability balance as of December 31 of the respective preceding year. Deferred revenue that will be realized during the succeeding 12-month period is recorded as current, and the remaining deferred revenue is recorded as non-current.

We receive payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Unbilled receivables include amounts related to our contractual right to consideration for both completed and partially completed performance obligations that have not been invoiced. If the right to consideration is based on satisfaction of another performance obligation in the contract other than the passage of time, we would record a contract asset. As of June 30, 2026 and December 31, 2025, unbilled receivables of $3.2 million and $2.7 million, respectively, are included in prepaid expenses and other current assets in our unaudited condensed consolidated balance sheet. As of June 30, 2026 and December 31, 2025, we have no contract assets recorded on our unaudited condensed consolidated balance sheet.

Disaggregated Revenue by geographic location:

Revenues by geographic area presented based upon the location of the customer are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
United States	$	147,123	$	153,207	$	294,148	$	303,757
Rest of world	63,760		60,986		126,426		120,689
Total	$	210,883	$	214,193	$	420,574	$	424,446

Transaction Price Allocated to the Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2026 (in thousands). The estimated revenues do not include unexercised contract renewals.


	Next Twelve Months		Thereafter
Product subscriptions	$	532,620	$	269,940
Professional services	13,090		4,624
Total	$	545,710	$	274,564

Deferred contract acquisition and fulfillment costs

The following table summarizes the activity of the deferred contract acquisition and fulfillment costs, which primarily consist of capitalized sales commissions, for the six months ended June 30, 2026 and 2025 (in thousands):


	Six Months Ended June 30,
	2026		2025
Beginning balance	$	115,348	$	125,806
Capitalization of contract acquisition and fulfillment costs	24,800		19,397
Amortization of deferred contract acquisition and fulfillment costs	(27,798)		(29,197)
Ending balance	$	112,350	$	116,006

Note 3. Business Combinations

Kenzo Security, Inc.

On March 26, 2026, we acquired all of the equity interest of Kenzo Security, Inc. ("Kenzo"), a United States-based agentic AI security platform built to scale autonomous security investigations, for a purchase price with an aggregate fair value of $25.5 million. The purchase consideration consisted of $24.2 million in cash paid at closing and $1.3 million of deferred cash payments related to certain indemnities outlined in the purchase agreement. The acquisition further enhances our Command Platform, accelerating managed detection and response ("MDR") services from AI-assisted workflows to AI-driven, machine-speed security operations.

In connection with the acquisition, we committed to issue shares of our common stock having an aggregate value of $25.3 million to two key employees of Kenzo (the "Key Employee Consideration"), subject to continued employment. These shares will be issued in three equal annual installments over a 36-month period, starting on the first anniversary of the closing date of the transaction. The Key Employee Consideration will be recognized as stock-based compensation expense over the required employment period. For the three and six months ended June 30, 2026, we recognized stock-based compensation expense related to the Key Employee Consideration of approximately $2.1 million and $2.2 million, respectively. The number of shares to be issued at each issuance date will be determined by dividing the aggregate value by the 30-day average closing price per share of our common stock as of the issuance date. The Company's obligations with respect to the Key Employee Consideration will be presented as a liability on our unaudited condensed consolidated balance sheet during the vesting period.

The preliminary allocation of the purchase price is based on our initial estimates of the fair values of assets acquired and liabilities assumed and is subject to revision. The primary areas of the purchase price allocation that are not yet finalized relate to the fair values of the developed technology intangible asset and goodwill. These valuations are pending the completion of third-party appraisals.

The following table summarizes the preliminary allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands):


Consideration:
Cash	$	24,167
Deferred cash consideration	1,348
Fair value of total consideration transferred	$	25,515

Recognized amount of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	821
Accounts receivable	134
Prepaid and other current assets	46
Property and equipment, net	10
Accrued expenses and other current liabilities	(10)
Deferred revenue	(152)
Other long-term liabilities	(600)
Intangible asset	7,200
Total identifiable net assets assumed	$	7,449
Goodwill	18,066
Total purchase price allocation	$	25,515

We identified developed technology as the sole acquired intangible asset. The estimated fair value of the developed technology intangible asset was $7.2 million with an estimated useful life of the developed technology is 6 years, which was based on a preliminary valuation using a probability weighted expected return model (“PWERM”). As part of the PWERM, we made certain assumptions regarding the present value of the after-tax cash flows attributed to the developed technology at a discount rate which reflected any risks associated with the developed technology and our weighted average cost of capital. Any future adjustments made to the fair value of the developed technology, any assets acquired, or liabilities assumed will be adjusted in the period they are determined and recognized with a corresponding adjustment to goodwill.

The excess of the purchase price over the tangible assets acquired, identifiable intangible asset acquired and assumed liabilities was recorded as goodwill. We believe that the amount of goodwill reflects the expected synergistic benefits of being able to leverage the integration of the technology acquired with our existing product offerings and being able to successfully market and sell these new features to our customer base. The goodwill was allocated to our one reporting unit. The acquired goodwill and intangible asset were not deductible for tax purposes.

In the three and six months ended June 30, 2026, we recorded less than $0.1 million and $0.5 million, respectively, of acquisition-related transaction costs related to the acquisition of Kenzo to general and administrative expense.

Our revenue and net income attributable to the Kenzo business for the three and six months ended June 30, 2026 were not material.

Noetic Cyber, Inc.

On July 3, 2024, we acquired Noetic Cyber. Inc, (“Noetic”) for an aggregate fair value of $51.2 million, which included a contingent consideration arrangement (the “Earnout Consideration”) of up to $20.0 million, measured annually over a three-year period (the "Earnout Period") based on the achievement of certain performance targets and continued employment requirements. If all performance targets are achieved, approximately $13.1 million of Earnout Consideration will be paid in cash, and the remaining $6.9 million will be settled in common stock, with the stock settled portion recognized as stock-based compensation expense over the required employment period. The cash-settled portion was included in purchase consideration at acquisition and is remeasured each reporting period, with changes recorded to general and administrative expense.

On October 3, 2025, we distributed $6.0 million as Earnout Consideration related to the initial Earnout Period. Of this amount, $4.1 million was settled in cash, while the remaining $1.9 million was settled through the issuance of 94,229 common stock units. As of June 30, 2026, the fair value of the contingent purchase consideration was $9.0 million which was recorded within accrued expenses and other current liabilities in our unaudited condensed consolidated balance sheet. For the three and six months ended June 30, 2026, we recorded approximately $0.1 million and $0.2 million, respectively, of accretion expense related to the contingent purchase consideration to general and administrative expense. In the three and six months ended June 30, 2026, we also recognized stock-based compensation expense related to these share-based awards in the amount of $1.0 million and $2.1 million, respectively.

In June 2026, we issued 113,599 shares of common stock as the second installment of common stock issued to the two key Noetic employees.

Our revenue and net income attributable to the Noetic business for the three and six months ended June 30, 2026 were not material.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding the Noetic business combination.

Note 4. Investments

Our investments, which are all classified as available-for-sale, consisted of the following (in thousands):


	As of June 30, 2026
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Description:
U.S government agencies	$	277,381	$	28	$	(437)	$	276,972



Total assets	$	277,381	$	28	$	(437)	$	276,972


	As of December 31, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Description:


U.S government agencies	$	411,424	$	701	$	—	$	412,125

Total assets	$	411,424	$	701	$	—	$	412,125

As of June 30, 2026 and December 31, 2025, our available-for-sale investments had maturities ranging from one to eight months and from one to fourteen months, respectively.

On October 30, 2025, we entered into a $5.5 million investment in a privately-held cybersecurity company via a Simple Agreement for Future Equity (“SAFE”). The investment in the SAFE is accounted for at cost, subject to adjustments for impairment and observable changes in fair value, and is presented on the unaudited condensed consolidated balance sheets within the category of Other Assets. During the three and six months ended June 30, 2026, we did not identify any impairments or observable price changes that would require an adjustment to the carrying value.

For all of our investments for which the amortized cost basis was greater than the fair value at June 30, 2026 and December 31, 2025, we have concluded that there is no plan to sell the security nor is it more likely than not that we would be required to sell

the security before its anticipated maturity. In making the determination as to whether the unrealized loss is other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity.

Note 5. Fair Value Measurements

We measure certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

•Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability.

We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and consider an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers.

The following table presents our financial assets and liabilities measured and recorded at fair value on a recurring basis using the above input categories (in thousands):


	As of June 30, 2026
	Level 1		Level 2		Level 3		Total
Description:
Assets:
U.S. government agencies	$	276,972	$	—	$	—	$	276,972

Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets)	—		401		—		401
Total assets	$	276,972	$	401	$	—	$	277,373
Liabilities:
Contingent consideration (other current liabilities)	—		—		9,030		9,030
Liability-classified performance stock units (other long-term liabilities)	—		—		1,064		1,064

Total liabilities	$	—	$	—	$	10,094	$	10,094


	As of December 31, 2025
	Level 1		Level 2		Level 3		Total
Description:
Assets:
U.S. government agencies	$	412,125	$	—	$	—	$	412,125



Foreign currency forward contracts designated as cash flow hedges (prepaid expenses and other current assets)	—		1,868		—		1,868
Total assets	$	412,125	$	1,868	$	—	$	413,993
Liabilities:
Contingent consideration (other current liabilities)	—		—		8,864		8,864

Total liabilities	$	—	$	—	$	8,864	$	8,864

Cash and cash equivalents are excluded from the table above as carrying amounts reported in our unaudited condensed consolidated balance sheet equal or approximate fair value. As of June 30, 2026, the fair value of our 0.25% and 1.25% convertible senior notes due 2027 and 2029, as further described in Note 9, Debt, was $576.0 million and $253.5 million, respectively, based upon quoted market prices. We consider the fair value of the Notes (as defined in Note 9, Debt) to be a Level 2 measurement due to limited trading activity of the Notes. As of June 30, 2026, the fair value of our contingent consideration, as further described in Note 3, Business Combinations, was $9.0 million and is classified as a Level 3 measurement based on inputs not observable in the market. As of June 30, 2026, the fair value of our liability-classified performance stock units, as further described in Note 10, Stock-Based Compensation - Liability-classified PSUs, is $1.1 million and is classified as a Level 3 measurement based on the inputs not observable in the market.

Our SAFE investment, as described in Note 4, Investments, is accounted for as an equity investment under the measurement alternative per ASC 321 as there was no readily determinable fair value. The SAFE had a carrying amount of $5.5 million as of June 30, 2026.

Note 6. Property and Equipment

Property and equipment are recorded at cost and consist of the following (in thousands):




	As of June 30, 2026		As of December 31, 2025
Computer equipment and software	$	23,276	$	23,728
Furniture and fixtures	12,025		11,893
Leasehold improvements	61,649		61,456
Total	96,950		97,077
Less accumulated depreciation	(67,771)		(65,087)
Property and equipment, net	$	29,179	$	31,990

We recorded depreciation expense of $2.7 million and $2.3 million for the three months ended June 30, 2026 and 2025, respectively, and $5.0 million and $5.1 million for the six months ended June 30, 2026 and 2025, respectively. During the three and six months ended June 30, 2026, we wrote off $0.9 million and $1.7 million of fully depreciated computer equipment and software, respectively, in accordance with our policy as described in Note 2, Summary of Significant Accounting Policies, included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Note 7. Goodwill and Intangibles

Goodwill was $593.3 million as of June 30, 2026 and $575.3 million as of December 31, 2025. The following table displays the changes in the gross carrying amount of goodwill (in thousands):


	Carrying Amount


Balance at December 31, 2025	$	575,268
Kenzo acquisition	18,066
Balance at June 30, 2026	$	593,334

The following table presents details of our intangible assets which include acquired identifiable intangible assets and capitalized internal-use software costs (in thousands):


		As of June 30, 2026						As of December 31, 2025
	Weighted Average Estimated Useful Life (years)	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Intangible assets subject to amortization:
Developed technology	6.3	$	154,055	$	(120,529)	$	33,526	$	146,855	$	(111,886)	$	34,969
Customer relationships	6.0	12,000		(12,000)		—		12,000		(11,906)		94
Trade names	0.0	2,619		(2,619)		—		2,619		(2,619)		—
Licensed IP	3.0	500		(25)		475		—		—		—
Total acquired intangible assets		169,174		(135,173)		34,001		161,474		(126,411)		35,063
Internal-use software	3.0	91,885		(62,546)		29,339		83,934		(53,892)		30,042
Total intangible assets		$	261,059	$	(197,719)	$	63,340	$	245,408	$	(180,303)	$	65,105

Intangible assets are expensed on a straight-line basis over the useful life of the asset. Amortization expense was $8.6 million and $9.0 million for the three months ended June 30, 2026 and 2025, respectively, and $17.4 million and $17.9 million for the six months ended June 30, 2026 and 2025, respectively.

Estimated future amortization expense of the acquired identifiable intangible assets and completed capitalized internal-use software costs as of June 30, 2026 was as follows (in thousands):


2026 (for the remaining six months)	$	14,833
2027	20,631
2028	10,238
2029	5,035
2030	4,543
2031 and thereafter	2,678
Total	$	57,958

The table above excludes the impact of $5.4 million of capitalized internal-use software costs for projects that have not been completed as of June 30, 2026, and therefore, all the costs associated with these projects have not been incurred.

Note 8. Derivative and Hedging Activities

To mitigate our exposure to foreign currency fluctuations resulting from certain expenses denominated in certain foreign currencies, we enter into forward contracts that are designated as cash flow hedging instruments. These forward contracts have contractual maturities of twelve months or less, and as of June 30, 2026 and December 31, 2025, outstanding forward contracts had a total notional value of $35.9 million and $78.8 million, respectively. The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract. During the six months ended June 30, 2026 and 2025, all cash flow hedges were considered effective. Refer to Note 5, Fair Value Measurements, for the fair values of our outstanding derivative instruments.

Note 9. Debt

Convertible Senior Notes

In March 2021, we issued $600.0 million aggregate principal amount of convertible senior notes due March 15, 2027 (the “2027 Notes”), and in September 2023, we issued $300.0 million aggregate principal amount of convertible senior notes due March 15, 2029 (the “2029 Notes”) (collectively, the “Notes”).

Issuance

Maturity Date

Interest Rate

First Interest Payment Date

Effective Interest Rate

Semi-Annual Interest Payment Dates

Initial Conversion Rate per $1000 principal

Initial Conversion Price

Number of shares (in millions)

2027 Notes

March 15, 2027

0.25%

September 15, 2021

0.67%

March 15 and September 15

9.6734

103.38

5.8

2029 Notes

March 15, 2029

1.25%

March 15, 2024

1.69%

March 15 and September 15

15.4213

64.85

4.6

The 2027 Notes and the 2029 Notes are senior unsecured obligations, do not contain any financial covenants and are governed by indentures between us, as issuer, and U.S. Bank Trust Company, National Association, as trustee (the “Indentures”). The total net proceeds from the 2027 Notes and the 2029 Notes offerings, after deducting initial purchase discounts and debt issuance costs, were $585.0 million and $292.0 million, respectively.

As of June 30, 2026, the 2027 Notes and the 2029 Notes were not convertible at the option of the holders.

The holders may convert the 2027 Notes and the 2029 Notes at any time on or after December 15, 2026 and December 15, 2028, respectively, until the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the circumstances set forth above. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, in the manner and subject to the terms and conditions provided in the Indentures.

If we undergo a fundamental change (as set forth in the Indentures) at any time prior to the maturity date, holders of the Notes will have the right, at their option, to require us to repurchase for cash all or any portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date or following our issuance of a notice of redemption, in each case as described in the Indentures, we will increase the conversion rate for a holder of the Notes who elects to convert its Notes in connection with such a corporate event or during the related redemption period in certain circumstances.

For additional details on the terms of our Notes, see Note 10, Debt, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Accounting for the Notes

In accounting for the issuance of the Notes, the principal less debt issuance costs are recorded as debt on our consolidated balance sheet. The debt issuance costs are amortized to interest expense using the effective interest method over the contractual term of the Notes.

The net carrying amount of the Notes as of June 30, 2026 and December 31, 2025 was as follows (in thousands):


	2027 Notes			2029 Notes
		Principal		Unamortized debt issuance costs		Total		Principal		Unamortized debt issuance costs		Total
Balance at December 31, 2025		$	600,000	$	(3,044)	$	596,956	$	300,000	$	(4,672)	$	295,328
Amortization of debt issuance costs		—		1,250		1,250		—		692		692

Balance at June 30, 2026		$	600,000	$	(1,794)	$	598,206	$	300,000	$	(3,980)	$	296,020

Interest expense related to the Notes was as follows (in thousands):


	Three Months Ended June 30,
	2026						2025
	2027 Notes		2029 Notes		Total		2025 Notes		2027 Notes		2029 Notes		Total
Contractual interest expense	$	375	$	937	$	1,312	$	86	$	375	$	938	$	1,399
Amortization of debt issuance costs	631		354		985		24		627		348		999
Total interest expense	$	1,006	$	1,291	$	2,297	$	110	$	1,002	$	1,286	$	2,398


	Six Months Ended June 30,
	2026						2025
	2027 Notes		2029 Notes		Total		2025 Notes		2027 Notes		2029 Notes		Total
Contractual interest expense	$	750	$	1,875	$	2,625	$	345	$	750	$	1,875	$	2,970
Amortization of debt issuance costs	1,250		692		1,942		97		1,241		680		2,018

Total interest expense	$	2,000	$	2,567	$	4,567	$	442	$	1,991	$	2,555	4,988

Capped Calls

We entered into privately negotiated capped call transactions with certain counterparties in connection with the issuance of the 2027 Notes (the "2027 Capped Calls") and the 2029 Notes (the “2029 Capped Calls” together with the 2027 Capped Calls, the “Capped Calls”).

In the event the market price of our common stock is in excess of the strike price, the Capped Calls are expected to reduce potential dilution to our common stock upon conversion of a given series of notes and/or offset any cash payments that we are required to make in excess of the principal amount of converted notes of such series, as the case may be, with such reduction and/or offset subject to a cap. The Capped Calls are subject to adjustment upon the occurrence of certain specified extraordinary events affecting us, including merger events, tender offers and announcement events. In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including nationalization, insolvency or delisting, changes in law, failures to deliver, insolvency filings and hedging disruptions.

The following table sets forth other key terms and premiums paid for the Capped Calls related to each series of Notes:


	Capped Calls Entered into in Connection with the Issuance of the 2027 Notes		Capped Calls Entered into in Connection with the Issuance of the 2029 Notes
Initial strike price, subject to certain adjustments	$	103.38	$	64.85
Cap price, subject to certain adjustments	$	159.04	$	97.88
Total premium paid (in thousands)	$	76,020	$	36,570
Expiration dates	January 1, 2027 - March 11, 2027		February 13, 2029 - March 13, 2029

For additional details on the terms of our Capped Calls, see Note 10, Debt, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025.

For accounting purposes, the 2027 Capped Calls and the 2029 Capped Calls are separate transactions, and not part of the terms of the 2027 Notes and the 2029 Notes. The 2027 Capped Calls and 2029 Capped Calls are recorded in stockholders' equity and are not accounted for as derivatives.

Credit Agreement

On June 25, 2025 (the "Closing Date"), we entered into a credit agreement (the "Credit Agreement"), by and among us, Rapid7 LLC, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, that provides for a $200.0 million revolving credit facility with a letter of credit sublimit of $20.0 million. The Credit Agreement allows for incremental facilities up to the greater of $141 million or 75% of Consolidated EBITDA (as defined in the Credit Agreement), which we currently would be able to utilize, if needed. Additional incremental facilities may be incurred, subject to certain conditions. We incurred fees of $1.7 million in connection with entering into the Credit Agreement. The fees are recorded in other current and non-current assets on the consolidated balance sheet and are amortized on a straight-line basis over the contractual term of the arrangement. Under the terms of the Credit Agreement, we are required to pay a commitment fee on the unused portion of the credit facility. The commitment fee rate is determined by our total net leverage ratio and that of our subsidiaries, ranging from 0.20% to 0.25% per annum on the unused portion of the credit facility. The commitment fee is expensed as incurred and included within interest expense on the consolidated statement of operations. The Credit Agreement matures on the fifth anniversary of the Closing Date or, if certain specified liquidity conditions are not satisfied, 91 days prior to the earliest maturity date of either the 2027 or the 2029 Notes. The Credit Agreement also contains certain affirmative and negative covenants, including a requirement to maintain a minimum interest coverage ratio for the duration of the Credit Agreement and a maximum net leverage ratio.

The borrowings under the Credit Agreement bear interest at a variable annual rate based on either the Secured Overnight Financing Rate (SOFR) subject to a floor of zero or alternate base rate plus, in each case, a fixed margin, which varies depending on our net leverage ratio. As of June 30, 2026, we did not have any outstanding borrowings under the Credit Agreement.

We recorded $0.1 million and $0.2 million of amortization of debt issuance costs related to the Credit Agreement for the three and six months ended June 30, 2026, respectively.

As of June 30, 2026, we had a total of $5.7 million in letters of credit outstanding as collateral for certain office space leases which reduce the amount of borrowing availability under our Credit Agreement.

Note 10. Stock-Based Compensation

(a) General

Stock-based compensation expense for restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), stock options, purchase rights issued under our employee stock purchase plan, and earnout consideration and key employee consideration shares related to acquisitions was classified in the accompanying unaudited condensed consolidated statements of operations as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Stock-based compensation expense:
Cost of revenue	$	1,586	$	2,580	$	3,302	$	4,844
Research and development	9,242		10,250		17,648		20,636
Sales and marketing	4,443		7,451		9,514		14,692
General and administrative	4,554		7,300		9,251		14,560
Total stock-based compensation expense	$	19,825	$	27,581	$	39,715	$	54,732

We recognize stock-based compensation expense for all awards on a straight-line basis over the applicable vesting period, which is generally three to four years.

Our Compensation Committee adopted and approved the performance goals, targets and payout formulas for our 2026 and 2025 bonus plans. In 2025, this approval included permitting executive officers and certain other employees the opportunity to receive payment of their earned bonuses in the form of common stock (in lieu of cash), which was subsequently eliminated by the Compensation Committee in the fourth quarter of 2025 and not offered in 2026. For the three and six months ended June 30,

2025, we recognized stock-based compensation expense related to such bonuses in the amount of $0.4 million and $0.7 million, respectively, based on the probable expected performance against the pre-established corporate financial objectives as of June 30, 2025.

(b) Restricted Stock, Restricted Stock Units and Performance-Based Restricted Stock Units

Equity-classified RSUs and PSUs

RSUs and PSUs activity classified as equity during the six months ended June 30, 2026 was as follows:


	Shares	Weighted Average Grant Date Fair Value








Unvested balance as of December 31, 2025	3,970,517	$	33.48
Granted	5,146,939	6.67
Vested	(899,634)	42.40
Forfeited	(720,497)	31.68
Unvested balance as of June 30, 2026	7,497,325	$	14.18

As of June 30, 2026, the unrecognized compensation expense related to our unvested equity-classified RSUs and PSUs was $91.8 million, which will be recognized over an estimated weighted average amortization period of 2.31 years.

In May 2026, our Compensation Committee awarded 525,000 RSUs as an inducement grant to our new Chief Product and Technology Officer, in connection with the commencement of his employment. The RSUs vest over a three year period, with 1/3 vesting on June 15, 2027, and the remaining vesting in quarterly increments thereafter, subject to continuous service as of each such date.

In March 2026, our Compensation Committee awarded 467,945 RSUs and 1,051,538 PSUs as inducement grants concurrently with the acquisition of Kenzo. The PSUs require the achievement of certain milestones based on our attainment of year over year managed MDR and security information and event management ("SIEM") annualized recurring revenue goals. The PSUs have two measurement and vesting dates through March 31, 2029, subject to the award recipients' continuous service as of each such date. If achievement of the milestones are not met, no PSUs will be earned. In the three and six months ended June 30, 2026, we recorded $0.6 million of stock-based compensation expense related to these PSUs based on estimated achievement of the performance criteria.

In February 2026, our Compensation Committee awarded 567,108 PSUs based on achievement of total new annualized recurring revenue ("New ARR") and adjusted EBITDA (pre-bonus) targets for fiscal year 2026, with each metric weighted 50%. New ARR is defined as the annual value of new recurring revenue from new and existing customer contracts executed during fiscal year 2026. Adjusted EBITDA Pre-Bonus is a non-GAAP measure that we define as net income before interest income, interest expense, other income (expense), net, provision for income taxes, depreciation expense, amortization of intangible assets, stock-based compensation expense, acquisition-related expenses, litigation-related expenses, impairment of long-lived assets, restructuring expense, and corporate bonus expense. Payout ranges from 0%-150% of targets, with no PSUs earned if minimum performance thresholds are not achieved. The performance period is one year, and any earned PSUs will vest in three equal annual installments, subject to the participants' continuous service. For the three and six months ended June 30, 2026, we recorded $0.5 million and $0.7 million, respectively, of stock-based compensation expense related to these PSUs based on estimated achievement of the performance criteria.

Liability-classified PSUs

PSUs activity classified as liability during the six months ended June 30, 2026 was as follows:


	Shares	Weighted Average Grant Date Fair Value








Unvested balance as of December 31, 2025	—	$	—
Granted	4,313,750	3.19

Forfeited	(168,750)	1.81
Unvested balance as of June 30, 2026	4,145,000	$	3.25

As of June 30, 2026, the unrecognized compensation expense related to our unvested liability-classified PSUs was $21.1 million, which will be recognized over an estimated weighted average amortization period of 2.75 years.

The PSUs are structured to be settled in cash upon vesting, unless the Compensation Committee makes a one-time irrevocable election to settle the awards in shares of Rapid7 common stock in lieu of cash. Once an election to settle the PSUs in common stock is made, it cannot be revoked, and the award will be settled exclusively in shares. Absent such an election, the awards will be settled in cash based on the fair market value of our common stock on the settlement date.

The number of shares that may ultimately vest is based on the specified price hurdles when our common stock closes at or above the specified price for 30 consecutive calendar days. For a 30 consecutive calendar day price between price hurdles, the payout is determined utilizing a linear interpolation. The PSUs are also subject to continued employment through the end of the performance period, except in the case of certain qualifying terminations. The stock price thresholds and related payout percentages between the two plans are as follows:


	Price Hurdles
	Below $15.00	$15.00	$17.50	$20.00	$25.00	$30.00 or Higher
Plan 1	—%	50%	75%	100%	125%	150%
Plan 2	—%	—%	—%	100%	125%	150%

Given these PSUs contain a market-based vesting condition, we estimate the fair value of the awards using a Monte Carlo simulation model, which is required because the stock price hurdles affect the number of shares that will ultimately vest. The simulation models tens of thousands of potential stock price paths for the Company to estimate the probability of achieving various stock price hurdle outcomes. The expense is recognized over the requisite service period based on the award's fair value remeasured at each reporting date using a Monte Carlo simulation model, with cumulative expense adjusted in the period of each remeasurement to reflect changes in fair value. The following table summarizes the assumptions used in the Monte Carlo simulation model to estimate the fair value of the liability-classified PSUs as of June 30, 2026:


	Grant Date			As of June 30, 2026
	Plan 1(1)	Plan 1(2)	Plan 2(1)	Plan 1	Plan 2
Expected term (in years)	3.00	2.79	3.00	2.75	2.75
Expected volatility	50.1%	51.6%	50.1%	52.1%	52.1%
Risk-free interest rate	3.85%	4.07%	3.85%	4.12%	4.12%
Expected dividend yield	—%	—%	—%	—%	—%
Fair value per unit	$2.37	$4.42	$1.81	$5.87	$4.85

(1) PSUs granted March 31, 2026

(2) PSUs granted June 15, 2026

In June 2026, the Company's Compensation Committee granted 2,125,000 PSUs to our new Chief Executive Officer, Wael Mohamed, in connection with the commencement of his employment under the 2015 Plan. These PSUs were issued under Plan 1.

In March 2026, the Company's Compensation Committee granted 2,188,750 PSUs to executive officers and other key employees under the 2015 Plan. These PSUs were granted under two separate plan designs with distinct payout targets, with 726,250 shares issued under Plan 1 and 1,462,500 issued under Plan 2. These PSUs contain market-based performance conditions tied to the achievement of specified stock price hurdles for our common stock over a three-year performance period ending March 31, 2029.

As the awards default to cash settlement, the awards are classified as liabilities until such time as the Compensation Committee makes an irrevocable election to issue shares. As of June 30, 2026, the Compensation Committee has not approved a settlement in shares; therefore, these PSUs remain classified as a liability. The liability associated with these awards is initially measured at the estimated fair value of the award that is ultimately expected to vest on the grant date and is subsequently remeasured to fair value at each reporting date until the earlier of (i) settlement in cash or (ii) the election to settle the PSUs in shares. Changes in fair value are recognized as compensation expense (or a reduction thereof) in the period of change. The stock-based compensation expense associated with these awards will be recognized over the three-year performance period associated with the awards.

(c)Stock Options

The following table summarizes information about stock option activity during the reporting periods:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)








Outstanding as of December 31, 2025	223,232	$	13.38		$	498


Forfeited/cancelled	(9,250)	18.50
Outstanding as of June 30, 2026	213,982	13.16		0.50	—
Vested and exercisable as of June 30, 2026	213,982	$	13.16	0.50	$	—

(d)Employee Stock Purchase Plan

Under the Rapid7, Inc. 2015 Employee Stock Purchase Plan ("ESPP"), employees may set aside up to 15% of their gross earnings, on an after-tax basis, to purchase our common shares at a discounted price, which is calculated at 85% of the lesser of: (i) the market value of our common stock at the beginning of each offering period and (ii) the market value of our common stock on the applicable purchase date.

On March 13, 2026, we issued 498,051 shares of common stock to employees, with a purchase price of $5.80 per share, for aggregate proceeds of $2.9 million.

Note 11. Income Taxes

We provide for income taxes during interim periods based on our estimate of the effective tax rate for the year. Our effective tax rates for the three and six months ended June 30, 2026 and 2025 are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Effective Tax Rate	(3.6)	%	19.3	%	6.4	%	31.0	%

The primary reconciling items between the Federal statutory tax rate of 21% and our overall effective rate for the three and six months ended June 30, 2026 were due to foreign taxes on our international operations inclusive of return to provision, US federal and state income taxes, the impact of valuation allowance on deferred tax assets, and a discrete tax benefit related to our acquisition of Kenzo.

The primary reconciling items between the Federal statutory tax rate of 21% and our overall effective rate for the three and six months ended June 30, 2025 were due to foreign taxes on our international operations, state income taxes, and the impact of valuation allowance on deferred tax assets.

Note 12. Net Income per Share

The following table summarizes the computation of basic and diluted net income per share of our common stock for the three and six months ended June 30, 2026 and 2025 (in thousands, except share and per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Numerator:
Net income attributable to common stockholders, basic and diluted	$	6,073	$	8,338	$	7,203	$	10,443

Denominator:
Weighted average common shares outstanding, basic	67,024,154		64,441,000		66,601,615		64,140,087
Weighted average effect of dilutive shares:
Dilutive effect of equity incentive plans	895,807		255,992		813,525		322,231

Weighted average common shares outstanding, diluted	67,919,961		64,696,992		67,415,140		64,462,318

Net income per share attributable to common stockholders, basic	$	0.09	$	0.13	$	0.11	$	0.16
Net income per share attributable to common stockholders, diluted	$	0.09	$	0.13	$	0.11	$	0.16

We intend to settle any conversion of our 2027 Notes and 2029 Notes in cash, shares, or a combination thereof. The dilutive impact of the Notes for our calculation of diluted net income per share is considered using the if-converted method. For the three and six months ended June 30, 2026 and 2025, the shares underlying the Notes were not considered in the calculation of diluted net income per share as the effect would have been anti-dilutive.

In connection with the issuance of the 2027 Notes and the 2029 Notes, we entered into the 2027 Capped Calls and 2029 Capped Calls, which were not included for the purpose of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive.

As of June 30, 2026 and 2025, the 2027 Notes and the 2029 Notes were not convertible at the option of the holder. We had not received any conversion notices through the issuance date of our consolidated financial statements. For disclosure purposes, we have calculated the potentially dilutive effect of the conversion spread, which is included in the table below. The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding for the respective periods below because they would have been anti-dilutive:


	Three Months Ended June 30,		Six Months Ended June 30,
	2026	2025	2026	2025
Options to purchase common stock	219,941	—	221,401	—

Common shares issued in conjunction with acquisitions	610,821	342,962	1,555,116	338,527
Shares to be issued under ESPP	307,992	129,195	307,992	129,195
Convertible senior notes	10,429,891	10,429,891	10,429,891	10,429,891
Total	11,568,645	10,902,048	12,514,400	10,897,613

Note 13. Commitments and Contingencies

(a) Purchase Obligations

During the three and six months ended June 30, 2026, there have been no material changes outside the ordinary course of business to the Company’s contractual obligations and commitments from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

(b) Warranty

We provide limited product warranties. Historically, any payments made under these provisions have been immaterial.

From time to time, we may be a party to litigation or subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

(d) Indemnification Obligations

We agree to standard indemnification provisions in the ordinary course of business. Pursuant to these provisions, we agree to indemnify, hold harmless and reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally our customers, in connection with any United States patent, copyright or other intellectual property infringement claim by any third party arising from the use of our products or services in accordance with the agreement or arising from our gross negligence, willful misconduct or violation of the law (provided that there is not gross or willful misconduct on the part of the other party) with respect to our products or services. The term of these indemnification provisions is generally perpetual from the time of execution of the agreement. We carry insurance that covers certain third-party claims relating to our services and limits our exposure. We have never incurred costs to defend lawsuits or settle claims related to these indemnification provisions.

As permitted under Delaware law, we have entered into indemnification agreements with our officers and directors, indemnifying them for certain events or occurrences while they serve as officers or directors of Rapid7.

(e) Income Taxes

From time to time, we may receive income tax assessments from taxing authorities asserting additional tax liabilities owed. During the quarter ended June 30, 2024, we received an initial assessment from the Israel Tax Authority (“ITA”) of approximately 324 million Israeli New Shekels (approximately $108 million, based upon exchange rates as of June 30, 2026 between the Israeli New Shekel and the US Dollar) related to fiscal year 2021. Based on our interpretation of the regulations and available case law, we believe that the tax positions we have taken on our filed tax return in Israel are sustainable and we intend to defend our position through all available means. As such, we have not recorded any impact of the ITA assessment in our unaudited condensed consolidated financial statements for the six months ended June 30, 2026. We are continuing to monitor developments related to this matter and its impact on our existing income tax reserves for all open years. If we are unsuccessful in sustaining our tax position in this matter, our financial condition and results of operations would be adversely affected.

Note 14. Segment Information and Information about Geographic Areas

We operate in a single reportable operating segment, providing product subscriptions and professional services to our customers. The operating segment’s accounting policies are consistent with those described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025. Our chief operating decision maker (“CODM”) is our Chief Executive Officer. One of the measures of profit or loss that is used by our CODM to assess performance and allocate resources is consolidated net income, as reported in the unaudited condensed consolidated statements of operations. Consolidated net income is used by our CODM in monitoring actual versus budgeted results as well as in benchmarking against our competitors, which are used in assessing performance of the segment.

The following table includes segment revenue, segment profit or loss, significant segment expenses and other segment expenses for the three and six months ended June 30, 2026 and 2025 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Total revenue	$	210,883	$	214,193	$	420,574	$	424,446
Adjusted total cost of revenue(1)	59,714		56,056		118,324		108,849
Adjusted research and development(1)	37,831		36,977		77,779		74,479
Adjusted sales and marketing(1)	71,720		71,144		145,512		142,651
Adjusted general and administrative(1)	12,733		13,668		25,642		29,766
Other segment expense, net(2)	22,812		28,010		46,114		58,258
Net income	$	6,073	$	8,338	$	7,203	$	10,443

(1) Adjusted total cost of revenue excludes the impact of stock-based compensation expense and amortization of acquired intangible assets. Adjusted research and development excludes the impact of stock-based compensation expense. Adjusted sales and marketing excludes the impact of stock-based compensation and amortization of acquired intangible assets. Adjusted general and administrative excludes the impact of stock-based compensation, amortization of acquired intangible assets and acquisition-related expenses.

(2) Other segment expenses include stock-based compensation expense, amortization of acquired intangible assets, acquisition-related expenses, restructuring expenses, discrete tax benefit, interest income, interest expense, other income (expense) and (benefit) provision for income taxes. See the unaudited condensed consolidated financial statements for other financial information regarding our operating segment.

Property and equipment, net by geographic area was as follows (in thousands):




	As of June 30, 2026		As of December 31, 2025
United States	$	16,165	$	18,243
Rest of World	13,014		13,747
Total	$	29,179	$	31,990

Note 15. Restructuring

In the second quarter of 2026, we executed restructuring activities primarily within our sales and marketing departments and, to a lesser degree, within certain of our general and administrative business support departments to simplify our operations, align resources and investments with our core platform, and create capacity to reinvest in capabilities and solutions that improve the customer experience and strengthen our competitive position. The restructuring included a reduction of our workforce and has not been completed as of June 30, 2026 and was the initial stage of our restructuring activities discussed in Note 16, Subsequent Events.

During the three months ended June 30, 2026, we incurred $1.7 million of restructuring charges related to one-time employee termination benefits recorded within restructuring in the unaudited condensed consolidated statements of operations.

As of June 30, 2026, the restructuring liability accrued but not paid totaled $0.9 million, which is included within accrued expenses in the unaudited condensed consolidated balance sheets. We expect substantially all of the remaining cash payments to be settled in the third quarter of 2026 with some payments in the fourth quarter of 2026.

Potential position eliminations in each country are subject to local law and consultation requirements, which may extend this process beyond the third quarter of 2026 in certain countries. The charges that we expect to incur are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual expenses and timing of payments may differ materially from the estimates disclosed above.

The following table presents the activity of the restructuring liability for the six months ended June 30, 2026 (in thousands):


	Restructuring Liability
Balance at December 31, 2025	$	—
Charges	1,674
Payments	(791)
Balance at June 30, 2026	$	883

Note 16. Subsequent Events

We estimate that we will incur approximately $10 million - $11 million in charges in connection with the 2026 Restructuring Plan, consisting primarily of cash charges for employee transition, notice period and severance payments, employee benefits and related facilitation costs. We also expect to incur certain non-cash charges, including in connection with the accelerated vesting of share-based awards, which we do not expect to be significant. We expect that the majority of the restructuring charges will be incurred in the third and fourth quarters of 2026 and that the execution of the 2026 Restructuring Plan, including cash payments, will be substantially complete by the end of the fourth quarter of 2026.

Potential position eliminations in each country are subject to local law and consultation requirements, which may extend this process beyond the fourth quarter of 2026 in certain countries. The charges that we expect to incur are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual expenses may differ materially from the estimates disclosed above.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated financial statements and the related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2025 included in our Annual Report on Form 10-K, filed with the SEC on February 19, 2026. Forward-looking statements in this review are qualified by the cautionary statement included under the next sub-heading, “Special Note Regarding Forward-Looking Statements”.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including the sections entitled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Statements that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements concerning the following:

• our ability to continue to add new customers, maintain existing customers and sell new products and professional services to new and existing customers;

• uncertain impacts that prolonged economic uncertainty may have on our business, strategy, operating results, financial condition and cash flows, as well as changes in overall level of software spending and volatility in the global economy;

• the effects of increased competition as well as innovations by new and existing competitors in our market;

• our ability to effectively restructure our business in alignment with our strategic priorities;

• our ability to adapt to technological change and effectively enhance, integrate, innovate and scale our solutions and platform capabilities, including our Command Platform;

• our ability to capitalize on customer demand for consolidated security platforms and vendor consolidation trends, including our ability to deliver an integrated, open security operations platform;

• our ability to deliver, scale and operate managed services (including managed detection and response (“MDR”) and related offerings, including with respect to service quality, staffing, operating efficiency, and the integration of technology and expertise;

• our ability to effectively manage or sustain our growth and to sustain profitability;

• our ability to diversify our sources of revenue;

• potential acquisitions and our ability to successfully integrate acquired businesses, technologies and personnel, including the realization of anticipated benefits from such acquisitions;

• our expected use of proceeds from future issuances of equity or convertible debt securities;

• our ability to maintain, or strengthen awareness of, our brand;

• perceived or actual security, integrity, reliability, quality or compatibility problems with our solutions, including problems related to systems, unscheduled downtime, outages or security breaches in our customers;

• statements regarding future revenue, hiring plans, expenses, capital expenditures, capital requirements and stock performance;

• our ability to meet publicly announced guidance or other expectations about our business, key metrics and future operating results;

• our ability to maintain an adequate annualized recurring revenue growth;

• our ability to attract and retain qualified employees and key personnel and further expand our overall headcount;

• our ability to grow, both domestically and internationally;

• our ability to stay abreast of new or modified laws and regulations that currently apply or become applicable to our business both in the United States and internationally;

• our ability to maintain, protect and enhance our intellectual property;

• the outcomes of our initiatives that use artificial intelligence (“AI”), including the development, integration and effectiveness of AI-driven and autonomous (“agentic”) security capabilities within our solutions;

• the evolving threat landscape, including the increasing sophistication and frequency of cyberattacks, including those leveraging AI;

• costs associated with defending intellectual property infringement and other claims; and

• the future trading prices of our common stock and the impact of securities analysts’ reports on these prices.

These statements represent the beliefs and assumptions of our management based on information currently available to us. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified above, and those discussed in the section titled “Risk Factors” included under Part II, Item 1A. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this report.

As used in this report, the terms “Rapid7,” the “company,” “we,” “us,” and “our” mean Rapid7, Inc. and its subsidiaries unless the context indicates otherwise.

Overview

Rapid7 is a global leader in AI-powered managed cybersecurity operations, trusted to advance organizations’ cyber resilience. Open and extensible, the Rapid7 Command Platform integrates security data, enriching it with AI, threat intelligence, and 25 years of expertise and innovation to reduce risk and disrupt attackers. As a recognized leader in preemptive managed detection and response (MDR), Rapid7 unifies exposure and detection to transform the cybersecurity operations of customers worldwide. In today's rapidly evolving IT environment, customers are encountering escalating challenges due to the widening spectrum of attackers and techniques, including the proliferation of cyberattacks leveraging AI. We empower security professionals to manage a modern attack surface through our AI-driven technology, research, and broad, strategic expertise. Rapid7’s comprehensive security solutions, including our MDR services, next-gen security information and event management ("SIEM"), and exposure management help our global customers unify exposure management with threat detection and response to prioritize and reduce material risk, and eliminate threats with greater speed, precision, and consistency.

We believe that Rapid7 is poised to expand the capabilities of today's SecOps teams through our integrated, open data security operations platform which is powered by our AI-assisted workflows to AI-driven, machine-speed security operations. Rapid7 enables the Security Operations Center (“SOC”) to understand their fragmented attack surface through an attacker's perspective, thereby allowing them to proactively reduce exposures and better detect and respond to threats. Enriched by years of industry-leading risk research and managed services expertise, our integrated platform replaces reactive security with a preemptive, risk-aware approach that reduces attack surfaces and enables faster, more confident response through contextually rich insights and deep operational visibility.

In recent years, security leaders have increasingly prioritized consolidating fragmented point products into unified security operations platforms to improve visibility, operational efficiency, and risk outcomes. In 2022, Gartner reported that approximately 75% of organizations were pursuing security vendor consolidation as part of their SecOps strategies. This shift reflects mounting challenges associated with managing expanding attack surfaces, disconnected exposure data, escalating alert volume, and the need to continuously prioritize and respond to risk across complex environments. As a result, customers are seeking platforms that unify exposure management with threat detection and response, enabling them to identify where they are most vulnerable, anticipate how attackers may exploit those exposures, and respond with speed and precision. At the same time, customers are increasingly relying on MDR and adjacent managed services to deliver continuous expertise, higher-fidelity detection, and faster response outcomes that extend and augment internal SOC teams. In this context, organizations are prioritizing open, integrated security operations platforms that pair technology with expertise to deliver risk-aware detection and response across on-premise, cloud, identity, and external attack surfaces. We have been an active participant in advancing this shift toward consolidated SecOps by innovating across our open platform architecture, strengthening our exposure management and AI SOC capabilities, and expanding our managed services portfolio. As we continue to execute on our SecOps consolidation strategy, we are advancing innovation across our core platform capabilities and managed services to accelerate customer value and deliver a frictionless, integrated security operations experience.

As the threat landscape continues to grow in complexity, customers are demonstrating demand for integrated expertise to support them in effectively managing their security technologies. The convergence of these key trends – security consolidation, AI SOC capabilities, integrated cloud security, and expertise driven outcomes – forms the foundation of what our customers require for the modern SOC. Our focus is to be the leading provider of integrated, AI-driven security solutions infused with

human expertise for the modern SOC by providing risk-aware detection and response that outpaces attackers and strengthens security program maturity.

We market and sell our products and professional services to organizations of all sizes globally, including mid-market businesses, enterprises, non-profits, educational institutions and government agencies. Our customers span a wide variety of industries such as technology, energy, financial services, healthcare and life sciences, manufacturing, media and entertainment, retail, education, real estate, transportation, government and professional services. As of June 30, 2026, we had over 11,500 customers in 149 countries, including 34% of the Fortune 100. Our revenue was not concentrated with any individual customer and no customer represented more than 1% of our revenue for the three and six months ended June 30, 2026 and 2025.

Recent Developments

Restructuring Plan

In June 2026, we executed a limited restructuring activity designed to improve operational efficiencies and better align our workforce with current business needs. The restructuring included a reduction of our workforce primarily within our sales and marketing departments and, to a lesser degree, within our general and administrative business support departments. The restructuring activities are expected to be substantially completed by the end of the third quarter of 2026 with some payments continuing into the fourth quarter of 2026, subject to local law and consultation requirements. For further information, refer to Note 15, Restructuring, in the Notes to our Consolidated Financial Statements.

On August 7, 2026, our board of directors approved a restructuring plan that is designed to simplify our operations, align resources and investments with our core platform, and create capacity to reinvest in capabilities and solutions that improve the customer experience and strengthen our competitive position (collectively, the “2026 Restructuring Plan”). The 2026 Restructuring Plan includes reduction of the Company’s workforce by approximately 12%. For further information, refer to Note 16, Subsequent events, in the Notes to our Consolidated Financial Statements. The actions associated with the Restructuring Plan are expected to be completed by the end of fiscal 2026, subject to local law and consultation requirements.

Leadership Transition

Effective June 1, 2026, Wael Mohamed was appointed Chief Executive Officer, Corey Thomas was appointed Executive Chairman, and Marc Brown was appointed Lead Independent Director.

Our Business Model

We offer our products through a variety of delivery models to meet the needs of our diverse customer base, including:

•Cloud-based subscriptions, which provide our software capabilities to our customers through cloud access and on a subscription basis. Our Incident Command, Exposure Command, and Threat Command products are offered as cloud-based subscriptions, with an option for a one or multi-year term.

•Managed services, through which we operate our products and provide our capabilities on behalf of our customers. Our Managed Vulnerability Management, Managed Detection and Response, and Managed Application Security products are offered on a managed service basis, pursuant to one or multi-year agreements.

•Licensed on-premise software consists of term licenses. When licensed on-premise software is purchased, maintenance and support and content subscriptions, as applicable, are bundled with the license for the term period. Our Nexpose and Metasploit products are offered through term software licenses with an option for one or multi-year terms. Our maintenance and support provides our customers with telephone and web-based support and ongoing bug fixes and repairs during the term of the maintenance and support agreement, and our customers who purchase our Nexpose and Metasploit products also purchase content subscriptions, which provide them with real-time access to the latest vulnerabilities and exploits.

Additionally, we offer our products through our consolidation offerings, which unify our products and services to our customers in a single package. Our Threat Complete and Cloud Risk Complete packages are offered as cloud based subscriptions, with an option for a one or multi-year term. Our Managed Threat Complete Offering is offered on a managed service basis, generally pursuant to one or multi-year agreements.

For each of the three and six months ended June 30, 2026 and 2025, recurring revenue, defined as revenue from term software licenses, content subscriptions, managed services, cloud-based subscriptions and maintenance and support, was 97% of total revenue.

Components of Results of Operations

Revenue

We generate revenue primarily from selling products and professional services through a variety of delivery models to meet the needs of our diverse customer base.

Product Subscriptions

We generate product subscriptions revenue from the sale of (1) cloud-based subscriptions, (2) managed services offerings, which utilize our products and (3) software licenses with related maintenance and support and content subscription, as applicable. Software license revenue consists of revenues from term licenses. When software licenses are purchased, maintenance and support and content subscription, as applicable, are bundled with the license for the term period.

Professional Services

We generate professional service revenue from the sale of deployment and training services related to our products, incident response services and security advisory services.

Cost of Revenue

Our total cost of revenue consists of the costs of product subscriptions and professional services, as noted below. In addition, cost of revenue includes overhead costs for depreciation, facilities, IT, information security, and recruiting. Our IT overhead costs include IT personnel compensation costs and costs associated with our IT infrastructure. All overhead costs are allocated based on relative headcount.

Cost of Product Subscriptions

Cost of product subscriptions consists of personnel and related costs for our content, support, managed service and cloud operations teams, including salaries and other payroll related costs, bonuses, stock-based compensation and allocated overhead costs. Also included in cost of product subscriptions are software license fees, cloud computing costs and internet connectivity expenses directly related to delivering our products, amortization of contract fulfillment costs, as well as amortization of certain intangible assets including internally developed software.

Cost of Professional Services

Cost of professional services consists of personnel and related costs for our professional services team, including salaries and other payroll related costs, bonuses, stock-based compensation, costs of contracted third-party vendors, travel and entertainment expenses and allocated overhead costs.

We expect our cost of revenue to fluctuate on an absolute dollar basis as we continue to grow our revenue over time.

Gross Margin

Gross margin, or gross profit as a percentage of revenue, has been and will continue to be affected by a variety of factors, including the average sales price of our products and services, transaction volume growth, the mix of revenue between software licenses, cloud-based subscriptions, managed services and professional services and changes in cloud computing costs.

We expect our gross margins to fluctuate over time depending on the factors described above.

Operating Expenses

Operating expenses consist of research and development, sales and marketing, general and administrative expenses, impairment of long-lived assets, and restructuring costs. Operating expenses include overhead costs for depreciation, facilities, IT, information security and recruiting. Our IT overhead costs include IT personnel compensation costs and costs associated with our IT infrastructure. All overhead costs are allocated based on relative headcount. In the near term, we are taking restructuring actions that are expected to reduce the absolute amount of our expenses while continuing to prioritize investments to drive growth.

Research and Development Expense

Research and development expense consists of personnel costs for our research and development team, including salaries and other payroll related costs, bonuses and stock-based compensation. Additional expenses include third-party infrastructure costs,

travel and entertainment, consulting and professional fees for third-party development resources as well as allocated overhead costs.

Sales and Marketing Expense

Sales and marketing expense consists of personnel costs for our sales and marketing team, including salaries and other payroll related costs, commissions, including amortization of deferred commissions, bonuses and stock-based compensation. Additional expenses include marketing activities and promotional events, travel and entertainment, training costs, amortization of certain intangible assets and allocated overhead costs.

General and Administrative Expense

General and administrative expense consists of personnel costs for our executive, legal, human resources, and finance and accounting departments, including salaries and other payroll related costs, bonuses and stock-based compensation. Additional expenses include travel and entertainment, professional fees, litigation-related expenses, insurance, acquisition-related expenses, amortization of certain intangible assets and allocated overhead costs.

Restructuring Expense

Restructuring expense consists of charges related to a restructuring plan such as employee transition, notice period and severance payments and employee benefits and related facilitation costs. For further information, refer to Note 15, Restructuring, in the Notes to our unaudited condensed consolidated financial statements.

Interest Income

Interest income consists primarily of interest income on our cash and cash equivalents and our short and long-term investments.

Interest Expense

Interest expense consists primarily of contractual interest expense, amortization of debt issuance costs related to our convertible senior notes and revolving credit facility and induced conversion expense. We expect interest expense in the near term to represent contractual interest expense and amortization of debt issuance costs related to our convertible senior notes.

Other (Expense) Income, Net

Other (expense) income, net consists primarily of the change in fair value of derivative assets and unrealized and realized gains and losses related to changes in foreign currency exchange rates.

Provision for Income Taxes

Provision for income taxes consists of domestic and foreign taxes on income and withholding taxes. We maintain a substantially full valuation allowance for domestic and certain foreign deferred tax assets, including net operating loss carryforwards and tax credits. We determined as of June 30, 2026 that it was more likely than not that these deferred tax assets will not be realized. However, we may release some of these valuation allowances in future periods if positive evidence, such as projection of sustained future profitability, supports the realization of such deferred tax assets. Release of all or a portion of these valuation allowances would result in a decrease in the provision for income taxes in the period of the release.

Results of Operations

The following table presents the consolidated statement of operations data (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenue:
Product subscriptions	$	205,051	$	208,097	$	409,100	$	412,032
Professional services	5,832		6,096		11,474		12,414
Total revenue	210,883		214,193		420,574		424,446
Cost of revenue(1):
Product subscriptions	59,925		57,236		119,079		111,604
Professional services	5,620		5,823		11,215		10,935
Total cost of revenue	65,545		63,059		130,294		122,539
Operating expenses(1):
Research and development	47,073		47,227		95,427		95,115
Sales and marketing	76,186		79,247		155,120		158,647
General and administrative	17,385		21,166		35,597		44,752

Restructuring	1,675		—		1,675		—
Total operating expenses	142,319		147,640		287,819		298,514
Income from operations	3,019		3,494		2,461		3,393
Interest income	5,539		5,514		11,151		11,272
Interest expense	(2,533)		(2,627)		(5,031)		(5,281)
Other (expense) income, net	(162)		3,957		(888)		5,759
Income before income taxes	5,863		10,338		7,693		15,143
(Benefit) provision for income taxes	(210)		2,000		490		4,700
Net income	$	6,073	$	8,338	$	7,203	$	10,443

(1) Cost of revenue and operating expenses include stock-based compensation expense and depreciation and amortization expense as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Stock-based compensation expense:
Cost of revenue	$	1,586	$	2,580	$	3,302	$	4,844
Research and development	9,242		10,250		17,648		20,636
Sales and marketing	4,443		7,451		9,514		14,692
General and administrative	4,554		7,300		9,251		14,560
Total stock-based compensation expense	$	19,825	$	27,581	$	39,715	$	54,732


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Depreciation and amortization expense:
Cost of revenue	$	9,178	$	8,832	$	18,475	$	17,506
Research and development	799		648		1,515		1,558
Sales and marketing	868		1,557		1,709		3,223
General and administrative	386		353		742		768
Total depreciation and amortization expense	$	11,231	$	11,390	$	22,441	$	23,055

The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenue:
Product subscriptions	97.2	%	97.2	%	97.3	%	97.1	%
Professional services	2.8	%	2.8	%	2.7	%	2.9	%
Total revenue	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue:
Product subscriptions	28.4	%	26.7	%	28.3	%	26.3	%
Professional services	2.7	%	2.7	%	2.7	%	2.6	%
Total cost of revenue	31.1	%	29.4	%	31.0	%	28.9	%
Operating expenses:
Research and development	22.3	%	22.0	%	22.7	%	22.4	%
Sales and marketing	36.1	%	37.0	%	36.9	%	37.4	%
General and administrative	8.2	%	9.9	%	8.5	%	10.5	%

Restructuring	0.8	%	—	%	0.4	%	—	%
Total operating expenses	67.5	%	68.9	%	68.5	%	70.3	%
Income from operations	1.4	%	1.5	%	0.6	%	0.8	%
Interest income	2.6	%	2.6	%	2.7	%	2.7	%
Interest expense	(1.2)	%	(1.2)	%	(1.2)	%	(1.2)	%
Other (expense) income, net	(0.1)	%	1.8	%	(0.2)	%	1.4	%
Income before income taxes	2.8	%	4.8	%	1.9	%	3.7	%
(Benefit) provision for income taxes	(0.1)	%	0.9	%	0.1	%	1.1	%
Net income	2.9	%	3.9	%	1.8	%	2.6	%

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

All numbers presented below are in thousands, except for percentages.

Revenue


	Three Months Ended June 30,				Change				Six Months Ended June 30,				Change
	2026		2025		$		%		2026		2025		$		%
Revenue:
Product subscriptions	$	205,051	$	208,097	$	(3,046)	(1.5)	%	$	409,100	$	412,032	$	(2,932)	(0.7)	%
Professional services	5,832		6,096		(264)		(4.3)	%	11,474		12,414		(940)		(7.6)	%
Total revenue	$	210,883	$	214,193	$	(3,310)	(1.5)	%	$	420,574	$	424,446	$	(3,872)	(0.9)	%

Total revenue decreased by $3.9 million for the six months ended June 30, 2026 as compared to the corresponding period in 2025, primarily driven by a decrease in our non-core standalone products, partially offset by an increase in our managed detection and response revenue. The decrease in professional services revenue was primarily driven by lower penetration-testing revenue.

The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above.


	Three Months Ended June 30,						Change				Six Months Ended June 30,						Change
	2026			2025			$		%		2026			2025			$		%
Cost of revenue:
Product subscriptions	$	59,925		$	57,236		$	2,689	4.7	%	$	119,079		$	111,604		$	7,475	6.7	%
Professional services	5,620			5,823			(203)		(3.5)	%	11,215			10,935			280		2.6	%
Total cost of revenue	$	65,545		$	63,059		$	2,486	3.9	%	$	130,294		$	122,539		$	7,755	6.3	%
Gross margin %:
Products	70.8		%	72.5		%					70.9		%	72.9		%
Professional services	3.6		%	4.5		%					2.3		%	11.9		%
Total gross margin %	68.9		%	70.6		%					69.0		%	71.1		%

The increase in total cost of revenue for the six months ended June 30, 2026 compared with the corresponding period in 2025 was primarily driven by an increase of personnel expenses of $4.5 million, inclusive of a $6.1 million increase in wages and wage-related expenses primarily driven by an increase in headcount, partially offset by a $1.5 million decrease in stock-based compensation expense, which was driven by stock awards granted at lower stock prices and fewer awards granted than in the same period in 2025; a $1.1 million increase in cloud computing costs; a $1.0 million increase in facilities related expenses; and $0.8 million increase in amortization expense related to acquired developed technologies and capitalized internally-developed software.

The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above.

Operating Expenses

Research and Development Expense


	Three Months Ended June 30,						Change				Six Months Ended June 30,						Change
	2026			2025			$		%		2026			2025			$		%
Research and development	$	47,073		$	47,227		$	(154)	(0.3)	%	$	95,427		$	95,115		$	312	0.3	%
% of revenue	22.3		%	22.0		%					22.7		%	22.4		%

Research and development expenses slightly increased for the six months ended June 30, 2026 as compared to the same period in 2025, primarily driven by a $3.3 million increase in personnel costs, including a $6.2 million increase in wages and wage-related expenses, partially offset by a $3.0 million decrease in stock-based compensation expense which was driven by stock awards granted at lower stock prices and fewer awards granted than in the same period in 2025; a $1.0 million decrease related to professional fees as we used less third-party services; a $0.9 million decrease in hosting and cloud computing expenses; a $0.6 million decrease in impairment of internally-developed software expense; and a $0.8 decrease in expenses driven by a gain from hedging activities related to international research and development wages and wage-related costs. These expenses were offset by a $0.2 million increase to engineering costs as we continue to develop new and enhance existing products.

The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed as there were no material drivers for the reduction of expense in comparative three-month period as opposed to the slight increase in expense in comparative six-month periods.

Sales and Marketing Expense


	Three Months Ended June 30,						Change				Six Months Ended June 30,						Change
	2026			2025			$		%		2026			2025			$		%
Sales and marketing	$	76,186		$	79,247		$	(3,061)	(3.9)	%	$	155,120		$	158,647		$	(3,527)	(2.2)	%
% of revenue	36.1		%	37.0		%					36.9		%	37.4		%

Sales and marketing expenses decreased for the six months ended June 30, 2026 compared with the corresponding period in 2025, primarily driven by a $6.7 million decrease in personnel related expenses, which was substantially driven by the $0.7

million restructuring charges which reduced personnel related expenses for the quarter and a $5.2 million decrease in stock-based compensation which was driven by stock awards granted at lower stock prices and fewer awards granted than in the same period in 2025. Sales and marketing expense was further reduced by a $1.2 million decrease in amortization expense as the customer relationships intangible asset was completely amortized as of April 2026. The decrease was offset by a $2.4 million increase in professional fees for consulting, a $1.7 million increase expenses from sales related events, and a $0.8 million increase in marketing expenses.

The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above except for the impact of the $0.7 million restructuring charges which reduced personnel related expenses for the three months ended June 30, 2026 as compared to the same period in 2025.

General and Administrative Expense


	Three Months Ended June 30,						Change				Six Months Ended June 30,						Change
	2026			2025			$		%		2026			2025			$		%
General and administrative	$	17,385		$	21,166		$	(3,781)	(17.9)	%	$	35,597		$	44,752		$	(9,155)	(20.5)	%
% of revenue	8.2		%	9.9		%					8.5		%	10.5		%

General and administrative expenses decreased for the six months ended June 30, 2026 compared with the corresponding period in 2025, primarily driven by a $5.8 million decrease in personnel costs, which included a $5.3 million decrease in stock-based compensation expense due to more recent grants valued at a lower grant price and fewer awards granted. Additionally, professional fees decreased by $2.7 million, primarily related to legal and accounting services, and a $0.9 million decrease in bad debt expense. The decrease was partially offset by an increase in hosting expenses of $0.8 million associated with enterprise software and cloud computing costs.

The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above, except for bad debt expense which increased by $0.3 million for the three months ended June 30, 2026 as compared to the same period in 2025.

Restructuring Expense


	Three Months Ended June 30,						Change				Six Months Ended June 30,						Change
	2026			2025			$		%		2026			2025			$		%
Restructuring	$	1,675		$	—		$	1,675	100.0	%	$	1,675		$	—		$	1,675	100.0	%
% of revenue	0.8		%	—		%					0.4		%	—		%

Restructuring expenses increased for the six months ended June 30, 2026 compared with the corresponding period in 2025, primarily driven by a restructuring primarily from our reduction in force as we realign our workforce to focus on our core platform and create capacity to reinvest in capabilities and solutions that improve the customer experience and strengthen our competitive position.s whereas, there were no restructuring expenses in 2025

The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above.

Interest Income


	Three Months Ended June 30,				Change		Six Months Ended June 30,				Change
	2026		2025		$	%	2026		2025		$	%
Interest income	$5,539		$5,514		$25	0.5%	$11,151		$11,272		$(121)	(1.1)%
% of revenue	2.6	%	2.6	%			2.7	%	2.7	%

Interest income slightly decreased for the six months ended June 30, 2026 compared with the corresponding period in 2025, primarily driven by lower investment balances partially offset by interest income generated from higher cash and cash equivalent balances compared to the prior year.

Interest income was relatively flat for the three months ended June 30, 2026 compared to the same period in 2025, primarily driven by higher cash and cash equivalent balances partially offset by the lower investment balance in the three-month period ended June 30, 2026 as compared to the cash and cash equivalent balances in the comparative period.

Interest Expense


	Three Months Ended June 30,						Change				Six Months Ended June 30,						Change
	2026			2025			$		%		2026			2025			$		%
Interest expense	$	(2,533)		$	(2,627)		$	94	(3.6)	%	$	(5,031)		$	(5,281)		$	250	(4.7)	%
% of revenue	(1.2)		%	(1.2)		%					(1.2)		%	(1.2)		%

Interest expense decreased by $0.3 million for the six months ended June 30, 2026 compared with the corresponding period in 2025 primarily because the prior-year period included interest on the 2025 Notes prior to their maturity in May 2025.

The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above.

Other (Expense) Income, Net


	Three Months Ended June 30,						Change				Six Months Ended June 30,						Change
	2026			2025			$		%		2026			2025			$		%
Other (expense) income, net	$	(162)		$	3,957		$	(4,119)	(104.1)	%	$	(888)		$	5,759		$	(6,647)	(115.4)	%
% of revenue	(0.1)		%	1.8		%					(0.2)		%	1.4		%

Other (expense) income, net decreased for the six months ended June 30, 2026 compared with the corresponding period in 2025 primarily due to realized and unrealized losses on foreign currency transactions primarily related to transactions in the British Pound Sterling, the Euro, and the Israeli Shekel during the six months ended June 30, 2026 as compared to unrealized gains in the same period in 2025.

The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above.

(Benefit) provision for income taxes


	Three Months Ended June 30,						Change				Six Months Ended June 30,						Change
	2026			2025			$		%		2026			2025			$		%
(Benefit) provision for income taxes	$	(210)		$	2,000		$	(2,210)	(110.5)	%	$	490		$	4,700		$	(4,210)	(89.6)	%
% of revenue	(0.1)		%	0.9		%					0.1		%	1.1		%

Provision for income taxes decreased for the six months ended June 30, 2026 compared with the corresponding period in 2025. The decrease was primarily driven by a $3.2 million net favorable change in foreign provisions primarily from foreign return to provision adjustments, $0.6 million discrete tax benefit from the Kenzo acquisition, and a lower domestic tax expense due to OBBBA.

The year-over-year trends for the three-month period were aligned with the year-over-year trends for the six-month period discussed above except for the impact from the $0.6 million discrete tax benefit which was recorded in the first quarter of 2026.

Key Metrics

We monitor the following key metrics to help us measure and evaluate the effectiveness of our operations and as a means to evaluate period-to-period comparisons. We believe that both management and investors benefit from referring to these key metrics as supplemental information in assessing our performance and when planning, forecasting, and analyzing future periods. These key metrics also facilitate management's internal comparisons to our historical performance as well as comparisons to certain competitors' operating results. We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and also because they are used by institutional investors and the analyst community to help evaluate the health of our business (in thousands, except percentages):


	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Total revenue	$	210,883		$	214,193		$	420,574		$	424,446
Year-over-year growth	(1.5)		%	3.0		%	(0.9)		%	2.7		%
Income from operations	$	3,019		$	3,494		$	2,461		$	3,393
Non-GAAP income from operations	$	28,885		$	36,348		$	53,317		$	68,701
Operating margin	1.4		%	1.6		%	0.6		%	0.8		%
Non-GAAP operating margin	13.7		%	17.0		%	12.7		%	16.2		%
Net cash provided by operating activities	$	36,988		$	47,542		$	76,805		$	77,299
Free cash flow	$	31,925		$	42,280		$	65,342		$	66,957


	As of June 30,
	2026			2025
Annualized recurring revenue (“ARR”)	$	824,020		$	840,610
Year-over-year change	(2.0)		%	3.1		%
Number of customers	11,772			11,643
Year-over-year change	1.1		%	1.4		%
ARR per customer	$	70.0		$	72.2
Year-over-year change	(3.0)		%	1.7		%

Total Revenue and Growth. We are focused on driving continued revenue growth through increased sales of our products and professional services to new and existing customers. We monitor total revenue and believe it is useful to investors as a measure of the overall success of our business.

Non-GAAP Income from Operations and Non-GAAP Operating Margin. We monitor non-GAAP income from operations and non-GAAP operating margin, which are non-GAAP financial measures, to analyze our financial results. We believe non-GAAP income from operations and non-GAAP operating margin are useful to investors, as supplements to U.S. GAAP measures, in evaluating our ongoing operational performance and enhancing an overall understanding of our past financial performance and allowing for greater transparency with respect to metrics used by our management in its financial and operational decision-making. See "Non-GAAP Financial Results" below for further information on non-GAAP income from operations and a reconciliation of non-GAAP income from operations to the comparable GAAP financial measure.

Free Cash Flow. Free cash flow is a non-GAAP measure that we define as cash provided by operating activities less purchases of property and equipment and capitalization of internal-use software costs. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after necessary capital expenditures. See "Non-GAAP Financial Results" below for a reconciliation of non-GAAP free cash flow to the comparable GAAP financial measure.

Annualized Recurring Revenue and Growth. ARR is defined as the annual value of all recurring revenue related to active contracts as of the last day of the period. ARR is measured at a specific point in time and does not incorporate consideration of any anticipated contract terminations or other prospective events, regardless of whether such events may exert a favorable or adverse influence on the metric. ARR should be viewed independently of revenue and deferred revenue, as ARR is an operating metric and is not intended to be combined with or replace these items. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates and does not include revenue reported as professional services revenue in our consolidated statement of operations. We use ARR and believe it is useful to investors as a measure of the overall success of our business.

Number of Customers. We believe that the size of our customer base is an indicator of our global market penetration and that our net customer additions are an indicator of the growth of our business. We define a customer as any entity that has an active Rapid7 recurring revenue contract as of the specified measurement date, excluding only InsightOps and Logentries customers with a contract value less than $2,400 per year.

ARR per Customer. ARR per customer is defined as ARR divided by the number of customers at the end of the period.

Non-GAAP Financial Results

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we may provide investors with certain non-GAAP financial measures from time to time, including non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and free cash flow. The presentation of the non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons, and use certain non-GAAP financial measures as performance measures under our executive bonus plan. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making. While our non-GAAP financial measures are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, you should review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate our business.

We define non-GAAP gross profit, non-GAAP income from operations, non-GAAP operating margin, non-GAAP net income and non-GAAP net income per share as the respective GAAP balances excluding the effect of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt issuance costs and certain other items such as acquisition-related expenses, non-ordinary course litigation-related expenses, impairment of long-lived assets, induced conversion expense, change in the fair value of derivative assets, restructuring expense and discrete tax items. Non-GAAP net income per basic and diluted share is calculated as non-GAAP net income divided by the weighted average shares used to compute net income per share, with the number of weighted average shares decreased, when applicable, to reflect the anti-dilutive impact of the capped call transactions entered into in connection with our convertible senior notes.

We believe these non-GAAP financial measures are useful to investors in assessing our operating performance due to the following factors:

•Stock-based compensation expense. We exclude stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our expense. We believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between our operating results from period to period.

•Amortization of acquired intangible assets. We believe that excluding the impact of amortization of acquired intangible assets allows for more meaningful comparisons between operating results from period to period as the intangible assets are valued at the time of acquisition and are amortized over several years after the acquisition.

•Amortization of debt issuance costs. The expense for the amortization of debt issuance costs related to our convertible senior notes and revolving credit facility is a non-cash item and we believe the exclusion of this interest expense provides a more useful comparison of our operational performance in different periods.

•Acquisition-related expenses. We exclude acquisition-related expenses that are unrelated to the current operations and neither are comparable to the prior period nor predictive of future results.

•Restructuring expense. We exclude non-ordinary course restructuring expenses related to the restructuring activities because we do not believe these charges are indicative of our core operating performance and we believe the exclusion of the restructuring expense provides a more useful comparison of our performance in different periods.

•Discrete tax items. We exclude certain discrete tax items such as income tax expenses or benefits that are not related to ongoing business operations in the current year and adjustments to uncertain tax position reserves as these charges are not indicative of our ongoing operating results, and they are not considered when we are forecasting our future results.

We define adjusted EBITDA as net income before (1) interest income, (2) interest expense, (3) other (income) expense, net, (4) provision for income taxes, (5) depreciation expense, (6) amortization of intangible assets, (7) stock-based compensation expense, (8) acquisition-related expenses, and (9) restructuring expense. We believe that the use of adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods.

Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact upon our reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in our business and an important part of the compensation provided to our employees.

The following tables reconcile GAAP gross profit to non-GAAP gross profit for the three and six months ended June 30, 2026 and 2025 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
GAAP total gross profit	$	145,338	$	151,134	$	290,280	$	301,907
Stock-based compensation expense	1,586		2,580		3,302		4,844
Amortization of acquired intangible assets	4,245		4,423		8,668		8,846
Non-GAAP total gross profit	$	151,169	$	158,137	$	302,250	$	315,597


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
GAAP gross profit – product subscriptions	$	145,126	$	150,861	$	290,021	$	300,428
Stock-based compensation expense	1,282		2,054		2,651		3,785
Amortization of acquired intangible assets	4,245		4,423		8,668		8,846
Non-GAAP gross profit – product subscriptions	$	150,653	$	157,338	$	301,340	$	313,059


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
GAAP gross profit – professional services	$	212	$	273	$	259	$	1,479
Stock-based compensation expense	304		526		651		1,059
Non-GAAP gross profit – professional services	$	516	$	799	$	910	$	2,538

The following table reconciles GAAP income from operations to non-GAAP income from operations for the three and six months ended June 30, 2026 and 2025 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
GAAP income from operations	$	3,019	$	3,494	$	2,461	$	3,393
Stock-based compensation expense	19,825		27,581		39,715		54,732
Amortization of acquired intangible assets	4,268		5,090		8,762		10,210
Acquisition-related expenses(1)	98		183		704		366

Restructuring expenses	1,675		—		1,675		—
Non-GAAP income from operations	$	28,885	$	36,348	$	53,317	$	68,701

(1) For the three and six months ended June 30, 2026 and 2025, acquisition-related expenses included $0.1 million and $0.2 million and $0.7 million and $0.4 million, respectively, of accretion expense related to contingent consideration recorded in connection with our July 2024 acquisition of Noetic.

The following table reconciles GAAP net income to non-GAAP net income for the three and six months ended June 30, 2026 and 2025 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
GAAP net income	$	6,073	$	8,338	$	7,203	$	10,443
Stock-based compensation expense	19,825		27,581		39,715		54,732
Amortization of acquired intangible assets	4,268		5,090		8,762		10,210
Acquisition-related expenses	98		183		704		366

Amortization of debt issuance costs	1,077		999		2,122		2,018



Restructuring expense	1,675		—		1,675		—
Discrete tax items	—		—		(600)		—
Non-GAAP net income	$	33,016	$	42,191	$	59,581	$	77,769
Interest expense of convertible senior notes(1)	1,312		1,399		2,625		2,625
Numerator for non-GAAP earnings per share calculation	$	34,328	$	43,590	$	62,206	$	80,394

Weighted average shares used in GAAP earnings per share calculation, basic	67,024,154		64,441,000		66,601,615		64,140,087
Dilutive effect of convertible senior notes(1)	10,429,891		10,686,653		10,429,891		10,429,891
Dilutive effect of employee equity incentive plans(2)	895,807		255,992		842,964		322,231
Weighted average shares used in non-GAAP earnings per share calculation, diluted	78,349,852		75,383,645		77,874,470		74,892,209

Non-GAAP net income per share:
Basic	$	0.49	$	0.65	$	0.89	$	1.21
Diluted	$	0.44	$	0.58	$	0.80	$	1.07

(1) We use the if-converted method to compute diluted earnings per share with respect to our Notes. There was no add-back of interest expense or additional dilutive shares related to the Notes where the effect was anti-dilutive. On an if converted basis, for the three and six months ended June 30, 2026, the 2029 Notes and 2027 Notes were dilutive, for the six months ended June 30, 2025 the 2029 Notes, 2027 Notes and 2025 Notes were dilutive.

(2) We use the treasury method to compute the dilutive effect of employee equity incentive plan awards.

The following table reconciles GAAP net income to adjusted EBITDA for the three and six months ended June 30, 2026 and 2025 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
GAAP net income	$	6,073	$	8,338	$	7,203	$	10,443
Interest income	(5,539)		(5,514)		(11,151)		(11,272)
Interest expense	2,533		2,627		5,031		5,281
Other expense (income), net	162		(3,957)		888		(5,759)
Provision for income taxes	(210)		2,000		490		4,700
Depreciation expense	2,651		2,349		5,025		5,140
Amortization of intangible assets	8,580		9,041		17,416		17,915
Stock-based compensation expense	19,825		27,581		39,715		54,732
Acquisition-related expenses	98		183		704		366

Restructuring expense	1,675		—		1,675		—
Adjusted EBITDA	$	35,848	$	42,648	$	66,996	$	81,546

The following table reconciles net cash provided by operating activities to free cash flow for the three and six months ended June 30, 2026 and 2025 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Net cash provided by operating activities	$	36,988	$	47,542	$	76,805	$	77,299
Less: Purchases of property and equipment	(1,154)		(948)		(3,235)		(2,309)
Less: Capitalized internal-use software costs	(3,909)		(4,314)		(8,228)		(8,033)
Free cash flow	$	31,925	$	42,280	$	65,342	$	66,957

Liquidity and Capital Resources

As of June 30, 2026, we had $425.6 million in cash and cash equivalents, $277.0 million in investments that have maturities ranging from one to eight months and an accumulated deficit of $957.5 million. Our principal sources of liquidity are cash and cash equivalents, investments, cash flow provided by operating activities and our Credit Agreement. To date, we have financed our operations primarily through private and public equity financings, issuance of convertible senior notes and through cash generated by operating activities.

On June 25, 2025, we entered into a credit agreement (the "Credit Agreement") that establishes a senior secured revolving credit facility and provides for borrowings in an aggregate principal amount of up to $200 million (the “Revolving Facility”, the loans thereunder, the “Revolving Loans” and the commitments thereunder, the “Revolving Commitments”). The Credit Agreement allows for incremental facilities up to the greater of $141 million or 75% of Consolidated EBITDA (as defined in the Credit Agreement). Additional incremental facilities may be incurred, subject to certain conditions. The proceeds of the Revolving Facility can be used to finance working capital needs, capital expenditures, permitted acquisitions and other general corporate purposes. As of June 30, 2026, we were in compliance with all applicable covenants and had sufficient capacity under the affirmative covenants. Refer to Note 9, Debt, for additional information related to the credit agreement.

We believe that our existing cash and cash equivalents, our investments, our cash generated by operating activities and our available borrowings under our Credit Agreement will be sufficient to meet our operating and capital requirements for at least the next 12 months. Our foreseeable cash needs, in addition to our recurring operating expenses, include our expected capital expenditures to support expansion of our infrastructure and workforce, office facilities lease obligations, purchase commitments, including our cloud infrastructure services, potential future acquisitions of technology businesses, any election we make to redeem our convertible senior notes, and the repayment of the $600 million 2027 Notes . Further, in January 2025, we entered into a cloud-services agreement with a cloud services provider that contains minimum spend commitments. The agreement provides for an annual commitment of $125.0 million per year over the next five years, with an additional $35.0 million obligation over the five-year period of the agreement, for an aggregate total commitment of $660.0 million. As a result of the repayment of the 2027 Notes, we expect a reduction to cash received from interest income. For more information regarding this commitment, see Note 15, Commitments and Contingencies, in the Notes to our consolidated financial statements

on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 19, 2026 . In preparation for the repayment of the 2027 Notes, due on March 15, 2027, we implemented the following measures:

•Liquidity Management: Cash management procedures have been refined to ensure the availability of adequate liquidity, thereby supporting uninterrupted operations and facilitating the fulfillment of obligations related to the 2027 Notes without the incurrence of additional indebtedness.

•Investment Policy: We revised our investment policy to restrict all new investments to instruments with maturities not exceeding twelve months.

These actions collectively reinforce the organization’s commitment to prudent financial management and maintenance of a robust liquidity position.

Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts, the expansion of sales and marketing activities, particularly internationally, the introduction of new and enhanced products and service offerings, the cost of any future acquisitions of technology or businesses and any election we make to redeem our convertible senior notes. In the event that additional financing is required from outside sources, we may be unable to raise the funds on acceptable terms, if at all. If we are unable to raise additional capital on terms satisfactory to us when we require it, our business, operating results and financial condition could be adversely affected.

Cash Flows

The following table shows a summary of our cash flows for the six months ended June 30, 2026 and 2025 (in thousands):


	Six Months Ended June 30,
		2026		2025
Cash, cash equivalents and restricted cash at beginning of period		$	246,664	$	342,101
Net cash provided by operating activities		76,805		77,299
Net cash provided by (used in) investing activities		100,092		(120,530)
Net cash provided by financing activities		2,587		(42,390)
Effects of exchange rates on cash, cash equivalents and restricted cash		(541)		4,847
Cash, cash equivalents and restricted cash at end of period		$	425,607	$	261,327

Uses of Funds

Our historical uses of cash have primarily consisted of cash used for operating activities such as expansion of our sales and marketing operations, research and development activities and other working capital needs, as well as cash used for business acquisitions and purchases of property and equipment, including leasehold improvements for our facilities.

Operating Activities

Operating activities provided $76.8 million of cash and cash equivalents for the six months ended June 30, 2026, which reflects our ability to generate cash from our operations. Cash provided by operating activities was primarily driven by a net income of $7.2 million in addition to significant beneficial adjustments to reconcile net income to net cash provided from operating activities including $39.7 million in stock-based compensation, $22.4 million of depreciation from our fixed assets, and amortization, primarily from our internally-developed software and acquired intangibles. Additionally, working capital contributed an additional $7.2 million of cash to operating activities primarily driven by increase to operating cash flow from accounts receivable of $25.2 million, partially offset by decreases in deferred revenue of $19.6 million and accrued expenses of $8.3 million.

Operating activities provided $77.3 million of cash and cash equivalents for the six months ended June 30, 2025, which demonstrates our ability to generate cash from our operations partially offset by our continued investments in our operations and the timing of working capital adjustments. Cash provided by operating activities reflected our net income of $10.4 million and a decrease in our net operating assets and liabilities of $8.3 million, offset by non-cash charges of $75.1 million related primarily to depreciation and amortization, stock-based compensation expense, amortization of debt issuance costs and other non-cash charges. The change in our net operating assets and liabilities was primarily due to a $13.2 million decrease in accrued expenses, a $12.3 million decrease in deferred revenue, a $5.8 million increase in prepaid expenses, a $1.2 million decrease in other liabilities and a $3.0 million decrease in accounts payable, which each had a negative impact on operating cash flow.

These factors were offset by a $17.5 million decrease in accounts receivable and a $9.8 million decrease in deferred contract acquisition and fulfillment costs, which each had a positive impact on operating cash flow.

Investing Activities

Investing activities provided $100.1 million of cash for the six months ended June 30, 2026, primarily driven by $135.0 million of investment maturities, which was partially offset by $23.3 million in cash paid, net of cash acquired, in the acquisition of Kenzo to further strengthen our AI SOC capabilities and $8.2 million in capitalized internal-use software costs as we continue to invest and develop our product offering.

Investing activities used $120.5 million of cash for the six months ended June 30, 2025, consisting of $111.5 million in purchases of investments, net of sales/maturities, $8.0 million for capitalization of internal-use software costs, and $2.3 million in capital expenditures to purchase computer equipment and leasehold improvements, partially offset by $1.3 million in proceeds from other investments.

Financing Activities

Financing activities provided $2.6 million for the six months ended June 30, 2026, which consisted primarily of $2.9 million in proceeds from our employee stock purchase plan and was partially offset by $0.3 million in withholding taxes paid for the net share settlement of equity awards.

Financing activities used $42.4 million of cash for the six months ended June 30, 2025, which consisted primarily of $46.0 million in conversion of convertible senior notes, $1.9 million in withholding taxes paid for the net share settlement of equity awards, and $1.3 million in debt issuance costs, partially offset by $4.4 million in proceeds from the issuance of common stock purchased by employees under the Rapid7, Inc. 2015 Employee Stock Purchase Plan (“ESPP”) and $1.6 million in proceeds from the exercise of stock options.

Contractual Obligations and Commitments

As of June 30, 2026, there were no material changes from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 19, 2026 (the “Annual Report”).

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We do not engage in off-balance sheet financing arrangements. In addition, we do not engage in trading activities involving non-exchange traded contracts. We therefore believe that we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Critical Accounting Estimates

Our unaudited condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and disclosures. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates. Other than the new market-based PSU estimate discussed in Note 10, Stock-Based Compensation, there have been no material changes in our critical accounting estimates from those disclosed in our Annual Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Foreign Currency Exchange Risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. A majority of our customers enter into contracts that are denominated in U.S. dollars. Our expenses are generally denominated in the currencies of the countries where our operations are located, which is primarily in the United States and to a lesser extent in the United Kingdom, other Euro-zone countries within mainland Europe, Canada, Australia, Israel, Singapore and Japan. Our results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign currency exchange rates. The effect of a hypothetical 10% adverse change in foreign currency exchange rates on monetary assets and liabilities as of June 30, 2026 would not have been material to our financial condition or results of operations.

We enter into forward contracts designated as cash flow hedges to manage the foreign currency exchange rate risk associated with certain of our foreign currency denominated expenditures. The effectiveness of our existing hedging transactions and the availability and effectiveness of any hedging transactions we may decide to enter into in the future may be limited, and we may not be able to successfully hedge our exposure, which could adversely affect our financial condition and operating results. For further information, see Note 8, Derivatives and Hedging Activities, in the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in foreign currency rates.

Interest Rate Risk

As of June 30, 2026, we had cash and cash equivalents of $425.6 million consisting of bank deposits and money market funds and investments of $277.0 million consisting of U.S. government agencies. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes.

Our cash and cash equivalents and investments are subject to market risk due to changes in interest rates, which may affect our interest income and the fair value of our investments. Due in part to these factors, our future investment income may fluctuate due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because we classify our investments as available-for-sale securities, no gains or losses are recognized due to the changes in interest rates unless securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary.

The fair values of our convertible senior notes are subject to interest rate risk, market risk and other factors due to the conversion features of the notes. The fair values of the convertible senior notes may increase or decrease for various reasons, including fluctuations in the market price of our common stock, fluctuations in market interest rates and fluctuations in general economic conditions. The interest and market value changes affect the fair values of the convertible senior notes but do not impact our financial position, cash flows or results of operations due to the fixed nature of the debt obligation. Based upon the quoted market price as of June 30, 2026, the fair values of our 2027 Notes and 2029 Notes were $576.0 million and $253.5 million, respectively.

As of June 30, 2026, the effect of a hypothetical 10% increase or decrease in interest rates would not have had a material impact on our financial statements.

Inflation Risk

As of June 30, 2026, we do not believe that inflation had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operations of our disclosure controls and procedures as of June 30, 2026. Based on the evaluation of our disclosure controls and procedures as of June 30, 2026, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Inherent Limitations of Internal Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all

control issues and instances of fraud, if any, within Rapid7 have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we are a party to litigation or subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business, financial condition or results of operations. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

There have been no material changes to the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”) on February 19, 2026 (the “Annual Report”). Our operations and financial results are subject to various risks and uncertainties that, if they materialize, could adversely affect our business, financial condition and results of operations. In that event, the trading price of our common stock could decline. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors described in Part I, Item 1A. “Risk Factors” of our Annual Report. We may disclose additional changes to risk factors or disclose additional factors from time to time in our future filings with the SEC. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Recent Sales of Unregistered Equity Securities

None.

(b) Use of Proceeds from Initial Public Offering of Common Stock

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Certain of our executive officers and directors may execute purchases and sales of our securities through Rule 10b5-1 equity trading plans and “non-Rule 10b5- 1 equity trading arrangements” (as defined in Item 408(c) of Regulation S-K).

During the three months ended June 30, 2026, the executive officers or directors listed below terminated or modified a 10b5-1 equity trading plan, or adopted, terminated, or modified any “non-Rule 10b5-1 equity trading arrangement”.

Chief Accounting Officer

Name and Position

Action

Adoption or Transaction Date

Type of Trading Arrangement

Number of Shares of Common Stock to be Sold

Original Expiration Date

Scott Murphy, Chief Accounting Officer

Termination

May 8, 2026

Rule 10b5-1*

17,644**

June 1, 2026***

* Contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.

** Represents the maximum number of shares that may be sold pursuant to the Rule 10b5-1 trading arrangement in amounts and prices determined in accordance with a formula set forth in the plan. The actual number of shares sold will depend on the satisfaction of certain conditions as set forth in the written plan.

*** The Rule 10b5-1 trading arrangement was set to terminate on the earlier of the date all the shares under the plan were sold and the expiration date indicated, subject to early termination for specified events set forth in the plan.

During the three months ended June 30, 2026, other than noted above, none of our executive officers or directors terminated or modified a 10b5-1 equity trading plan, or adopted, terminated, or modified any “non-Rule 10b5-1 equity trading arrangement”.

Item 6. Exhibits.


Exhibit Number						Description

3.1						Amended and Restated Certificate of Incorporation of Rapid7, Inc., as of June 3, 2020 (incorporated by reference Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-37496), filed on August 10, 2020).
3.2						Amended and Restated Bylaws of Rapid7, Inc., as of June 3, 2020 (incorporated by reference to Exhibit 3.2 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-37496), filed on August 10, 2020).


10.1+						O ffer Letter, by and between the Company and Wael Mohamed, dated as of May 27, 2026. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-37496), filed on June 1, 2026)
10.2+						Severance and Equity Award Vesting Acceleration Letter Agreement, by and between the Company and Wael Mohamed, dated as of May 27, 2026. (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K (File No. 001-37496), filed on June 1, 2026)
31.1*						Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data file (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)


*			Filed herewith.
**			This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
+			Indicates management contract of compensatory plan.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	RAPID7, INC.

Date: August 10, 2026	By:	/s/ Wael Mohamed
		Name: Wael Mohamed
		Title: Chief Executive Officer

Date: August 10, 2026	By:	/s/ Rafeal E. Brown
		Name: Rafeal E. Brown
		Title: Chief Financial Officer